How to protect your home and life savings from nursing home costs

The risk of doing nothing . . . .

You've worked hard all your life, bought a home and set aside a nest egg. You've tried to do everything right.  Lately, you've seen friends or family in similar situations lose everything because they needed to go into a nursing home. Could this happen to you or your spouse? 

The bad news is more than half of seniors turning age 65 will need some long-term care during their lifetimes. Nursing home care, also known as long-term care, is expensive. It costs between $5000 to $7000 a month depending on where in the country you live. Many people assume Medicare covers nursing home costs but unfortunately, this is not true. 

The high cost of nursing home care is an issue in this country because many Americans cannot afford long-term care and options are limited. Long-term care insurance is very expensive. Like all insurance, the best time to buy it is when you don't need it. If you didn't buy it when you were younger, it may be too expensive now. There are some new hybrid insurance options but these can also be expensive. Private pay is not a viable option for most people. If you have a couple of million dollars in assets, you may be able to pay for a few years of long-term care out of pocket and still be able to pay for the well spouse's living expenses. However, if you don't have millions, paying for long-term care could completely wipe out your hard-earned assets and leave nothing for your children.

Many people in nursing homes for more than a few months find they are running out of money and must apply for Medicaid long-term care coverage to pay the nursing home. Medicaid long-term care coverage is a special program to assist people who meet certain financial requirements. It is not indigent care and should not be confused with other Medicaid programs for people living at or below the poverty level. Due to the high cost of nursing homes, Medicaid long-term care is basically a program for the middle-class. Who is most at risk? People with approximately $450.000 or less in assets are most vulnerable to losing everything to nursing home costs. If you are in this category, is there anything you can do to protect yourself? Yes.

Saving the Home

The good news is there are ways to protect yourself from losing everything to the nursing home. By consulting with an elder law attorney and implementing the right advance planning, you can protect your home and life savings even if you need to apply for Medicaid long-term care coverage in the future.  If you qualify for long-term care, Medicaid will pay all or a portion of your long-term care costs depending on your assets and income. Medicaid rules are complex and an elder law attorney can advise you about qualifying for Medicaid, Medicaid estate recovery, and the five-year look-back. You've probably heard these terms before. Estate recovery means Medicaid can force the sale of your estate assets after your death and take the money from the sale to pay itself back for benefits you received during your lifetime. In some states, Medicaid can go even further and take non-probate assets. This is called expanded estate recovery. Rules vary from state to state and you should consult with an attorney licensed in your state.

Medicaid also has a five-year look-back. This means you can be penalized for any gifts of property you make within five years of applying for Medicaid long-term care. To avoid losing everything and getting dinged by the five-year look-back, it is crucial to begin planning early if you are in the $450,000 asset range and think you or a spouse may need nursing home care in the future. There are various planning options including certain types of trusts that can help you protect your life savings. But you need to take action as soon as possible to have full use of these planning tools. You should start proactive planning at least five years before you think you or your spouse will need to apply for Medicaid long-term care coverage.

What happens if you haven't planned and your spouse suddenly needs to go into a nursing home? There are crisis planning tools that an elder law attorney can use to save a portion of your assets. Medicaid laws are complex. The timing of the Medicaid application is critical. Before you apply for Medicaid long-term care for yourself or a family member and make a costly mistake, talk to an elder law attorney.

We're here to help. If you are in North or South Carolina and need help with long-term care planning, call 704.887.5242 to schedule a consultation with Nancy Roberts. 



Nancy Roberts
Connect with me
Handling All of Your Family's Estate Planning Needs
Be the first to comment!
Post a Comment