During the period between 1944 in 1964, an unprecedented number of babies were born. This phenomenon has been dubbed the “baby boom.” If you do the math, you can see that these people are attaining senior citizen status.
The Social Security Administration has stated that they are receiving an average of 10,000 applications for benefits each and every day. They expect this volume to continue into the foreseeable future.
Elder law attorneys are legal professionals that focus on the needs of senior citizens. Since so many people are entering this category, our services are particularly relevant.
Without question, the most pressing elder law issue that we are facing is the matter of long-term care. The vast majority of senior citizens will qualify for Medicare when they reach the eligibility age. This government health insurance will provide a strong safety net, but there are out-of-pocket costs.
In addition to the premiums, copayments, and deductibles for products and services that are covered, there is the gaping hole in the Medicare framework. This program will not pay for a stay in a nursing home or assisted living facility, and it does not pay for in-home custodial care.
If you are not too concerned because you think that it is likely that you will never need living assistance, you are in for an unpleasant surprise.
According to the United States Department of Health and Human Services, seven out of every 10 seniors will require help with their activities of daily living. About 35% of them will ultimately reside in nursing homes.
It is not easy to get out a checkbook and pay for nursing home care on your own. The costs are rising year-by-year, but you can expect to pay somewhere in the vicinity of $100,000 for year in a private room in a nursing home. These expenses can be doubled for married couples.
Nursing Home Asset Protection
What’s the solution? For many, it is Medicaid eligibility. This jointly administered federal/state government health insurance program does pay for the custodial care that you would receive in a nursing home.
You are probably aware of the fact that Medicaid is only available to people with very limited financial resources. There is a Medicaid asset limit of just $2000, but there are some things that do not count, including your home.
Other non-countable assets include one vehicle, wedding and engagement rings, heirloom jewelry, personal effects, and the items that you have around the house. You can have up to $1500 of whole life insurance and unlimited term life insurance.
Prepaid burial plots are perfectly okay, and the program will not preclude you from eligibility if you have $1500 or less set aside for final expenses.
It should also be noted that a healthy spouse is entitled to certain property rights. There is a Medicaid Community Spouse Resource Allowance that gives the independent spouse the ability to keep half of the shared countable assets up to a limit.
The healthy spouse can also continue to receive income that is brought in by the institutionalized spouse if it is needed to maintain a minimal standard of living. This is called the Medicaid Monthly Maintenance Needs Allowance.
When it comes to the assets that are counted, you could engage in a process called a Medicaid “spend down.” You could actually spend your assets yourself, but most people that take this route give loved ones their inheritances in advance.
Timing is key when you are spending down, because there is a five-year Medicaid look back period. You are penalized and your eligibility is delayed if you give away assets within five years of your application submission.
To explain the penalty through the use of a simple example, if you gave away enough to pay for two years of nursing home care, your eligibility would be delayed by two years. This is why it is important to plan ahead in advance with the benefit of legal counsel.
Protect Your Legacy!
We are here to help if you would like to take steps to protect your legacy for the benefit of your loved ones with future nursing home costs in mind. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.