As elder law attorneys, we assist clients that are looking ahead toward the eventualities of aging. To put it bluntly, one thing leads to another, so we also provide estate planning advice. There are a number of different issues that are prominent at the present time, including physical elder abuse and financial elder abuse. We will discuss these in a different blog post, but the matter that we are going to focus on here is the nursing home dilemma.
People are living longer and longer lives, and the life expectancy of someone that is turning 67 today is at least 85 years. Perhaps surprisingly, the segment of the population that was between 85 and 94 years old was the fastest-growing age group between the last two censuses. According to the Alzheimer’s Association, approximately 4 out of every 10 people that reach the age of 85 have contracted the disease.
A very significant percentage of people that have Alzheimer’s require nursing home care. Of course, there are other reasons why individuals sometimes require the level of care that only a nursing home can provide. As you can see, the statistics would indicate that it is very possible that you could reside in nursing home toward the end of your life.
If you work and pay taxes for at least 10 years, or if you are married and your spouse has done this, you will qualify for Medicare when you reach the age of 65 under currently existing guidelines. The program will pay for convalescent care when you are going to recover after an injury or some type of surgery, but it will not pay for custodial care. This is the term for the form of assistance you would receive in a nursing home.
Nursing Home Costs
It is not easy to get out your checkbook and pay for nursing home care out of your own pocket. Here in the greater Detroit area where we practice as elder law attorneys, the median cost for a private room in a nursing home is just over $100,000 per year. These costs have been consistently rising, so the figure could be considerably higher if you need nursing home care in a couple of decades.
The Medicaid Solution
The picture looks pretty grim to this point, but fortunately, there is a widely embraced solution. Medicaid is a jointly administered federal/state government health insurance program that will pay for nursing home care. However, you are probably aware of the fact that it is a program that is intended for people with very limited financial resources. There is a cap on countable assets that stands at just $2000.
This is certainly a rather small figure, but many things that you own do not count when you apply for Medicaid to pay for long-term care. Your home is not considered to be a countable asset, but there is an equity limit of $572,000. If you are applying for Medicaid as a married person, and your spouse is remaining in your home, there is no equity limit at all.
Household effects and personal belongings are not countable assets for Medicaid purposes, and you can maintain ownership of one motor vehicle. Whole life insurance is coverage that has a cash value, and the limit on this is $1500. You can however have unlimited term life insurance, and prepaid burial plots are not counted by Medicaid.
When it comes to the assets that are countable, you could engage in a Medicaid spend down. This would typically involve giving gifts to your loved ones that would be inheriting them anyway. It would also be possible to convey assets into an irrevocable Medicaid trust. If there are investments that earn income, you would be allowed to keep the earnings until you are enrolled in Medicaid program.
This has to be done with precision timing, because there is a five-year look back period. Your eligibility is delayed if you divest yourself of assets within five years of the submission of your application for Medicaid coverage.
Attend a Free Seminar!
Our elder law attorneys are holding a number of free seminars over the coming weeks, and you can learn a lot more if you attend one of the sessions. To see the schedule and obtain registration information, click the following link: Mount Clemens, Michigan Elder Law Seminars.