You should be aware of the potential long-term care costs that you may incur late in your life, because they can have a significant impact on your legacy. About 70 percent of elders will need help with their activities of daily living, and most seniors will require professional assistance.
Nursing homes and in-home caregivers are very expensive, and Medicare does not cover the custodial care that they provide. More than half of people that receive paid long-term care incur the expenses for more than a year, so this is a matter that requires your attention.
Genworth Cost of Care Financial Survey
Each year, Genworth Financial conducts research to keep a finger on the pulse of the state of long-term care costs in the United States. They look at each metropolitan area, and the numbers for 2021 were released recently.
In the Hilton Head area, the median annual charge for an in-home health aide rose to $66,924. This is a staggering 27.17 percent increase over the 2020 number. The median charge for 12 months in a private room in a nursing home was $86,688.
Medicaid and the Home and Community Based Services Waiver
Most people do not feel as though Medicaid is relevant to them because they get health insurance through their employers, and they will qualify for Medicare when they are 65. This makes sense on the surface, but Medicaid can become quite relevant during your twilight years.
This program will in fact pay for long-term care, and it covers the costs for most seniors in nursing homes. There is also a Medicaid Home and Community Based Services Waiver that will cover in-home care that is provided by a professional caregiver.
The Medicaid Eligibility
Eligibility is not easy to attain if you have resources, because there is a $2000 asset limit. These are countable assets, but one motor vehicle, wedding and engagement rings, heirloom jewelry, home furnishings and other household items, and personal effects are not counted.
Prepaid burial plots are exempt along with unlimited term life insurance, $1500 of whole life, and $1500 saved for final expenses. The most significant non-countable asset is your home, with an equity limit of $636,000 in South Carolina in 2022.
Medicaid Estate Recovery
While you can qualify for Medicaid as a homeowner, you want to avoid this situation if it is at all possible. Congress has established a Medicaid estate recovery mandate, so the program can place a lien on property that remains in the estate of a deceased beneficiary.
Because of the low asset limit, a home is the only truly valuable asset that could still be in your possession at the time of your passing. If this situation arises, Medicaid would be able to attach the property.
Irrevocable, Income Only Medicaid Trust
The widely embraced solution is an irrevocable, income only Medicaid trust. You fund the trust with your home and assets that generate income. Before you apply for Medicaid, you will be able to accept distributions of the trust’s earnings and live in the home as usual.
You would not be able to reach the principal, but many people have no intention of spending the underlying source of their retirement income. If you apply for Medicaid at some point in the future, the assets that are in the trust would not count against you.
Advance planning is the key to the successful execution of this strategy, because there is a 60 month look back period. After you fund the trust, you will be ineligible for Medicaid for five years.
If you violate the rule, your eligibility is delayed. To provide an example, if you divest yourself of an amount that would pay for two years of care, your eligibility would be delayed by two years.
Schedule a Consultation Today!
Today is the day for action if you are going through life without a plan for aging. You can schedule a consultation at our Bluffton, SC elder care planning office if you call us at 843-815-8580, and you can use our contact form to send us a message.
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