Planning your estate from a financial perspective is certainly important, but when you do so you may also recognize that there are some elder law challenges to prepare for as well. The fact is that people are living longer than ever before. The average lifespan is in excess of 78 years as of this writing. Given the steady advances that we are seeing in medical science coupled with the improved understanding that we have with regard to healthy versus unhealthy lifestyles, it is logical to expect it to increase as time goes on.
Life if good, so this is certainly a positive development, but many people do face some challenges when they reach an advanced age. The U.S. Department of Health and Human Services tells us that seven out of every ten people who reach the age of 65 are going to be in need of long-term care at some juncture. This being the case, it is a good idea to prepare for this possibility in advance. After all, the long-term care facility that you may be living in will be your place of residence, and you want to be certain that it is a facility that you will be completely comfortable living in.
The last thing that you want to do is find that you need long-term care and then have to make a decision under pressure, perhaps at a time when it is mentally and/or physically difficult for you to do so. The wise course of action would be to do some research, seek out recommendations, and visit some facilities that sound appealing to you.
Price can be a factor as well; this type of care is very expensive, so you would do well to look for value as well as quality. Some simple and prudent preparation can make all the difference. If you never need the care, so be it. But if you do, you will certainly be glad that you took the time to find the facility that is right for you.
Paying for Long-Term Care
As we mentioned above, long-term care is costly, and Medicare will not pay for it. Depending on the size and scope of your assets, a stint in a nursing home could have a serious impact on your legacy. The national average charge for year-long stay in a private room in a nursing home last year was over $90,000, and people often require multiple years of nursing home care.
When you have always payed your way throughout your life, you would naturally assume you have to use your resources to address long-term care expenses. There is nothing wrong with taking this perspective, but there is a potential solution that can allow you to get the nursing home care that you need without sacrificing any property.
As we have stated, Medicare will not pay for long-term care, but Medicaid will pick up the tab if you can qualify.
There is a low $2000 limit on assets, but some things are not countable, including your home, but there is a $572,000 limit on equity in 2018. Wedding rings, engagement rings, heirloom jewelry, personal belongings, household effects, and one motor vehicle that is used as a primary source of transportation are not counted either. You can have a prepaid burial plot, and up to $1500 of whole life insurance is allowed. Term life insurance is coverage that has no cash value, and there is no limit on term life insurance.
When it comes to assets that are countable, you could give them to your loved ones, but you have to act in advance. All gift giving must be completed within five years of the submission of your application for Medicaid coverage. If you violate this 60 month look back rule, you would be penalized. You would not be able to qualify for Medicaid until you wake out a penalty period.
The length of the penalty would be tied to the dollar amount of the gifts. To explain by way of example, let’s say that the average cost for a year a nursing home in Michigan is $90,000. You gave away $180,000 to your children within this five-year period. Since this amount would pay for two years of nursing home care, your eligibility would be delayed by two years.
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If you would like to discuss these matters with one of our Mount Clemens elder law lawyers, you can set up a consultation if you send us a message or give us a call at 586-493-7661.