WHY AGING ADULTS NEED TO START PLANNING FOR LONG-TERM CARE NOW
Estate planning can be quite stressful, which can lead some people to rush through this critical process. Far too many people overlook long-term care planning when they sit down to plan their estates. They focus on what assets they would like to leave to which family members, while neglecting the potential reality of nursing home costs absorbing that money.
Even families with substantial assets can find that assisted living or nursing home facilities eat through a lifetime's worth of savings in only a few years. That is why it is so important for aging adults and the people who love them to discuss long-term care planning as soon as possible.
MEDICARE WILL NOT COVER ASSISTED LIVING OR NURSING HOME FACILITIES
Many older Americans rely on Medicare for health coverage. While Medicare does cover basic medical expenses, it has many large gaps in coverage. One of the most glaring issues is the lack of long-term care coverage or nursing home coverage in Medicare insurance. In other words, Medicare will not help pay for in-home skilled nursing or nursing home costs incurred by you or your loved ones.
Thankfully, Medi-Cal does cover the costs of nursing home care and similar care for older adults. However, qualifying for Medi-Cal when you have substantial assets can become rather tricky. Medi-Cal has a look-back period that is three years in California, depending on the assets the person applying has accumulated. Those who have made substantial financial transfers within the look-back period will incur penalties equivalent to the amount of money transferred. In other words, until they pay as much as they transferred to loved ones, Medi-Cal will not cover any of their expenses.
TRUSTS AND EARLY TRANSFERS ARE IDEAL WAYS TO AVOID MEDI-CAL PENALTIES
Anyone approaching retirement age should consider the potential that they may eventually require long-term care. That way, they can plan accordingly and protect their financial legacy for their families.
Moving substantial assets into a trust is one of the easiest ways to avoid issues with Medi-Cal in the future. You could continue to live in your home, after deeding it to the trust, without the value of the home impacting your eligibility for Medi-Cal when you need it. You can also place other assets, including liquid capital and investment accounts, in a trust. Limiting how much you can access in any given year will help ensure that you do not accidentally make yourself ineligible for Medi-Cal.
Older adults may also want to consider transferring assets directly to heirs as they age. For example, your family could decide to gift just under the maximum tax-exempt amount allowed to each heir every year until all capital has been disbursed. This protects heirs from tax liabilities and ensures that those assets will not end up paying for a nursing home in the future. Each family is unique, so it is important to keep an open mind when determining the best way to move forward with long-term care planning.
Elder law involves planning for complex health care, long-term care and other issues facing elderly and disabled individuals and their families. Studies show that we stand a 40 percent chance of needing long-term care at least once before we die. Therefore, everyone should take into account, that at some point, a nursing home or an assisted living facility may be needed.
An Elder Law Attorney can provide you with experienced advise on what long-term care options are available to you and how to qualify. Call our experienced attorneys today for a free consultation.