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Senior Long-Term Care Costs: Are You Prepared?

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Life Care PlanningA lot of people do not pay much attention to the subject of senior long-term care costs. First, there is the idea that you will never need long-term care if you have lived a relatively healthy life. Secondly, even if you need it, Medicare will pick up the tab, right?

Let’s take a look at these assumptions. When you find out the facts, you may come away with a renewed perspective.

Life Expectancies

There is a life expectancy tool on the Social Security Administration website. If you plug in the numbers for a woman who is celebrating her 67th birthday today, you see that the life expectancy is 87 years. For a 67-year-old man, the anticipated life expectancy is 85 years.

If you are not already receiving Social Security, you become eligible when you are 67 years of age. Most people certainly expect to live long enough to collect their benefit.

When you put two and two together, you see that there’s a good chance that you will experience life as an octogenarian.

Alzheimer’s Disease

A lot of seniors in nursing homes are unable to handle their own needs because of Alzheimer’s disease. According to the Alzheimer’s Association, about one third of people that are 85 years of age and older have contracted the disease.

Nursing Home Costs

Alzheimer’s alone is enough to get your attention, and people ultimately require nursing home care for other reasons. The United States Department of Health and Human Services tells us that 35 percent of seniors will spend time in nursing homes.

Genworth Financial has been researching long-term care costs for a number of years, and they are now making projections. According to their research, the annual median cost for a private room in an Oklahoma City nursing home will be over $155,000 in 2040.

That’s a lot of money to come up with late in your life, and a married couple may face two sets of bills. The average stay in a nursing home is one year, and 13 percent receive care for over five years.

Medicaid Eligibility

Fortunately, there is a solution to address senior long-term care costs. The Medicaid program will pay for a stay a nursing home if you can gain eligibility. It is a need-based program, so there is a $2,000 limit on assets.

Some assets don’t count, including your home with a $713,000 equity limit. You can also maintain ownership of one vehicle, wedding and engagement rings, household belongings, and personal items.

Income-Only Medicaid Trust

You can establish and fund a Medicaid trust to get assets out of your name so you can gain eligibility in the future. This would be an irrevocable trust, so you would not be able to reach the principal after you fund the trust.

That’s a good thing from a Medicaid planning perspective. Since you give up control of the assets, they don’t count if you apply for Medicaid.

You can however continue to receive income from the trust’s earnings. This can enable you to enjoy the same level of comfort, so nothing would change in your day-to-day life.

If you apply for Medicaid at least five years after you fund the trust, the strategy will be successful. Assets in the trust will not count, and you will be able to qualify for Medicaid to pay for senior long-term care.

Take Action Today!

We can help you prepare for senior long-term care costs as you craft a meaningful legacy plan for the benefit of your loved ones. To get started, call our Oklahoma City estate planning office at 405-843-6100.

Our Tulsa location can be reached at 918-615-2700, and you can use our contact form to send us a message.

 

Larry Parman, Estate Planning Attorney, Author, Speaker
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