How to Pay for Long-Term Care
Long term care is defined as needing help with a range of activities of daily living, including eating, dressing, going to the bathroom, personal hygiene, household chores and financial management. Care can be provided at the person’s home or in a skilled nursing facility. Long-term care also encompasses post-hospital rehabilitation, even if the person eventually returns home to independent living.
About 80% of people who need assistance get it at home, according to caregiver.org, the website of the Family Caregiver Alliance. This organization was cited in the Queens Chronicle’s recent article, “Shielding assets when it’s time for Medicaid.”
Many people are under the impression that once a senior gets into Medicare at age 65, along with a Medicare supplement plan, his or her long-term needs are totally covered. Not quite. Medicare and Medicare supplement plans cover doctor visits and hospitalizations for acute and chronic illnesses, but not long-term care. Medicare and Medicare supplements only cover up to 100 days of rehabilitation. Those seniors who require more rehabilitation or need assistance for the rest of their lives will need to pay for it out-of-pocket, use long-term care insurance purchased in advance, or qualify for Medicaid.
Anyone under 60 years of age should be investigating long-term care insurance. Although people over age 60 might be able to buy LTC, they might not qualify for health reasons. Plus, the premiums become very expensive as one gets older. This could result in an insured paying an insurance bill for years, and then discover that he or she can’t afford the expense. They end up without coverage when it’s needed. Another option is hybrid LTC insurance. This provides a set dollar amount of coverage that will goes to heirs as a life insurance payout if it isn’t used for care during the insured’s lifetime.
Those with moderate incomes who are less likely to be willing to pay for long-term care insurance must do Medicaid planning, as Medicaid eligibility is limited to those with very limited assets.
It’s possible to transfer assets to someone else, such as a child, and have them excluded from consideration for Medicaid eligibility. But it has to be done correctly. This means the transfer has to be done five years or more before applying for nursing home care, or one month for home care. If the applicant doesn’t satisfy this “look back” provision, they’re responsible for covering the cost of the care.
The single biggest mistake people make is giving their home to a child or having the child’s name added to the deed. This makes the owner and the child vulnerable. If the heir is sued or divorces, the house could be lost. Even in the best of circumstances, this move eliminates tax advantages.
Speak with an experienced elder law attorney about planning for long term care and Medicaid. This is a highly complex area of the law where one mistake could destroy a lifetime of savings.
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Reference: Queens Chronicle (October 6, 2016) “Shielding assets when it’s time for Medicaid”