Elder law attorneys address issues that are of interest to senior citizens, and retirement planning is not the only consideration. After your active retirement years, the twilight years will inevitably follow, and you may not be able to handle all of your own day-to-day needs at some point. In fact, according to the United States Department of Health and Human Services, 70 percent of senior citizens will someday need assistance with their activities of daily living.
If you have paid into the program sufficiently throughout your working career, you will qualify for Medicare as a source of health insurance when you are 65 years of age. That’s the good news, but the bad news is that this program does not pay for a stay in a nursing home or assisted living community, and it will not help with in-home care expenses either. This is a very significant gap in the coverage, because long-term care is extremely expensive.
Our offices are in Wilkes-Barre, Pennsylvania. Like everything else, long-term care costs tend to go up year-by-year, but at the time of this writing the median annual cost for a private room in a nursing home in our state is $120,000. Even if you can get the help that you need in your own place of residence, you are looking at an annual expense of about $50,000 for a licensed home health aide. If you need living assistance for a number of years, the combined expenses could potentially consume everything that you always intended to leave to your loved ones after you pass away.
Nursing Home Asset Protection
The matter of long-term care is the most pressing elder law issue that we face at the present time. Fortunately, there is a solution that you can take advantage of if you plan ahead effectively with the appropriate legal guidance. Medicaid is a jointly administered federal/state government health insurance program that will pay for nursing home care. There is also the
Medicaid Home and Community-Based Waiver program that will pay for in-home care.
You are probably aware of the fact that Medicaid is intended for people with very limited financial resources. As a result, you have to be able to prove that you do not have significant assets in your own name if you want to qualify for Medicaid to pay for long-term care. The asset limit is $2000, and almost all of the income that you bring in must be contributed toward the cost of the care that you are receiving.
When you read the above, you may resolve to give assets to your loved ones if and when you find out that you need long-term care. This makes sense on the surface, but the Medicaid program has a rule in place to prevent this practice. There is a five-year Medicaid look-back period. You are penalized, and your eligibility is delayed if you give away assets within this interim.
To explain the penalty through an example, let’s say that you gave away enough money to pay for two years in a nursing home within this five-year window. Under these circumstances, your eligibility for Medicaid would be delayed by two years, and you would have to pay out-of-pocket for this period of time.
It takes careful advance planning to divest yourself of assets in an intelligent manner at the right time so that you can qualify for Medicaid to pay for long-term care toward the end of your life. Some people will convey assets into an income-only Medicaid trust. You cannot touch the principal when you establish this type of irrevocable trust, but you would be able to receive income that is earned from assets in the trust before you apply for Medicaid coverage.
We Are Here to Help!
If you would like to discuss nursing home asset protection strategies with a licensed Wilkes-Barre, PA elder law attorney, our doors are open. You can schedule a consultation right now if you call us at 570-270-6524.