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. 

How To Pay For Long-Term Care

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. Most people use one or more of the following options.

1. Long-term care insurance. This can be an expensive option. 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/lie estate options available you may want to check into. Unfortunately, these can also be expensive.

2. Private pay. 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.

3. Medicaid Long-Term Care Coverage. If you qualify for Medicaid long-term care coverage, Medicaid will pay all or a portion of your long-term care costs depending on your assets and income. Many people in nursing homes for more than a few months find they are running out of money and must switch from self-pay to 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. Medicaid long-term care is basically a program for the middle-class to pay for skilled care. However, coverage under the program has a string attached - Medicaid estate recovery. 

What is Medicaid Estate Recovery?

Medicaid estate recovery means that once you are gone, or if you are married, when your spouse is also gone, the state 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.

Is there any way to save your home from Medicaid Estate Recovery?

The good news is there are ways to protect yourself from losing everything to the nursing home. Special irrevocable trusts and other planning strategies can protect your hard-earned assets if you act quickly enough.  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.  

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 must 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.

Dealing with a Crisis Situation

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. As with proactive planning, timing is everything. Before you apply for Medicaid long-term care for yourself or a family member, speak with 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
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