The costs associated with long-term care are a source of concern in the elder law community. Approximately four out of every 10 individuals who reach the age of 65 will someday spend some time in an assisted-living facility, nursing home, or both. To drill down a little bit further, citizens 85 years of age and older are the fastest-growing segment of the American population. About 25% of people who reach this age are residing in a nursing home at any given point in time.
The MetLife Mature Market Institute research into the costs associated with long-term care is telling indeed. On average, a year living in a private room in a nursing home in the United States in 2010 cost in excess of $83,000. The average charge for a year residing in an assisted-living facility reached $39,500, which represents a 5.2% increase over 2009 numbers. Industry experts expect this upward trending to continue into the foreseeable future.
Many people are surprised to hear that Medicare does not cover long-term care, and this can pose a problem. However, Medicaid will pick up the costs if you meet the eligibility requirements. To qualify for Medicaid, you cannot possess more than $2,000 in countable assets, but the exemptions – depending on your state’s law – include your home, vehicle, and personal possessions. So, many people engage in what is called a “spend down” to bring their assets under that $2,000 limit. One way to do this is by giving gifts to your family members. The challenge is to wisely choose the best way to do that.
Should you choose to give gifts in an effort to reduce your assets it is important to be aware of the Medicaid “look back” period. If you make gifts within five years of applying for Medicaid benefits you’ll be penalized and you won’t be able to begin receiving assistance until the penalty amount has been satisfied. So it takes foresight to be prepared to be eligible for Medicaid at the precise time it becomes necessary. The best way to devise an intelligent Medicaid strategy that optimizes your resources while you aim toward eligibility when the time is right is with the assistance of an experienced elder law attorney.
Larry Parman
Founding Attorney
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