Seventy percent of people turning age 65 can expect to use some form of long term care (“LTC”) during their lives. One-in-twelve individuals age 65 and older will experience a dementia-related condition, and a full 50% of those older than 85 will. In the next 20 years, the number of seniors reaching 100 years will more than double.
The Cost of Nursing Care
The average cost of skilled nursing care is over $80,000 per year and can easily approach or exceed a quarter-million dollars during one’s lifetime, especially for dementia patients. And those costs increase by 6% per year, more than double the average rate of inflation.
Most Americans are not prepared, nor can they afford, to pay these enormous LTC expenses out of pocket.
A Common Story Regarding Nursing Home Funding
The following story is as an example of a local Rapid City family that was able to find help following recommended strategies by an elder law specialist.
Married couple Thomas and Carol own their home valued at just under $350,000 and they have about $400,000 in other assets, including retirement savings. Recently, Thomas explained to his attorney that his wife, Carol, had been diagnosed with Stage 6 vascular dementia.
Thomas was very upset because his wife, age 72, needs to move into a skilled nursing facility immediately. Thomas was worried that the state will take everything they own. He wants to know how to protect their assets for his own retirement security and to provide a better quality of life for Carol.
Medicaid for LTC is one of the most complex and misunderstood government assistance programs ever. Lack of planning and improper transfers could jeopardize Carol’s care, resulting in severe Medicaid penalties by the state, and lead to the most undesirable outcomes. Planning is key.
Will They Have to Sell Their Home?
Under these circumstances, Thomas and Carol need to spend down over $276,000 of their own funds before Medicaid will pay benefits for Carol’s LTC expenses. They will not have to sell their home, because Thomas resides there.
However, the state will have a claim against his probate estate when he dies to recoup the LTC expenses paid for Carol. That claim will attach to their home (and more) and will reduce their planned inheritance for their children.
Strategies to Save Money
Several strategies were identified to save most, if not all, of that $276,000 with appropriate planning and asset re-positioning.
These strategies included exempt purchases and conversion of funds to a special Medicaid-compliant annuity to allow Carol to qualify for Medicaid sooner. The government’s own rules and policies permit and encourage this activity.
Had they started planning before Medicaid’s five-year look back period, additional strategies, such as in irrevocable trust, could have been used to provide more comprehensive protection.
Finding the Right Nursing Facility
Thomas was also struggling with the placement of his wife in a safe and compassionate nursing facility because of the state’s LTC bed moratorium and other challenging factors.
Working with a transitional care consultant affiliated with the elder law specialist, Thomas was able to coordinate all the steps necessary for a proper placement of his wife to the facility of his choice.
Helping You Plan for Nursing Home Expenses
Consulting with an elder law attorney, such as the Aspen Legacy Planning, can help explain and plan for these deeply complex and emotional issues. Also available is a free article addressing in detail America’s Long Term Care Crisis and Solutions.
By working with a transitional care consultant, such as Aspen Legacy Planning, you can ensure that your loved one will receive the most appropriate and compassionate care for a loved one having a life-altering incapacity condition.