The majority of people age 65 and over will require some form of long-term, skilled nursing care during their lifetime. And at least 40% of all Americans will require nursing home care at some point in time, with the average stay lasting approximately 892 days. The costs of both home care and nursing home care are crippling. In New York, a one year stay in a nursing home currently costs at least $150,000 per year, with costs expected to skyrocket in the coming years. Even full time care at home, the less expensive alternative to institutional care, can cost $80,000 per year. So how exactly does the average person pay for nursing care?
Plan Early - The earlier you plan, the more options you have.
Medicare and Supplemental Insurance - Contrary to popular belief, Medicare and supplemental insurance will not pay for the great majority of your long-term skilled nursing care. While Medicare will pay for limited skilled nursing services, I always advise my clients to be aware that these services are extremely limited in scope, and are always very limited in duration. If you require long term skilled care, either at home or at a nursing home, Medicare cannot be relied upon as a source of payment.
Long Term Care Insurance - Long term care insurance is an excellent addition to any long term care plan. A good long term care insurance policy will pay for the majority of your home care needs, and at least a portion of your nursing home care costs. However, most policies have a maximum lifetime benefit, which means that your policy may not pay for everything, and it will not pay forever. Additionally, most long term care policies have extensive underwriting, meaning that poor health or a history of health issues may disqualify you from coverage or make the cost of coverage prohibitive. Aside from being expensive, you may pay into the policy for many, many years without ever using or needing benefits. While some level of long term care insurance is beneficial for those who can afford it, it should generally be part of a larger plan.
Medicaid Planning - Medicaid, originally reserved for the financially needy, is now being increasingly used to pay for the skilled care of many Americans. New York State residents who meet Medicaid's financial eligibility requirements may be entitled to receive one of the following medical benefits depending on the applicant's medical needs:
- Home Care Benefits - In New York, a financially eligible individual who requires assistance in performing certain activities of daily living (which may include: bathing, toileting, and dressing) can seek to have Medicaid provide a home health aide for a certain number of hours per days per week.
- Nursing Home Benefits - A financially eligible individual whose health no longer allows he or she to remain at home, even with assistance, may be entitled to receive Medicaid Nursing Home benefits in which Medicaid will pay for the Nursing home care of the eligible applicant.
Planning - Through the use of various planning techniques it is possible to protect your home and other assets for your heirs, while also qualifying for Medicaid medical benefits such as Home Care and Nursing Home Care. One of the most popular techniques involves the use of a Medicaid Qualifying Trust.
What is a Medicaid Asset Protection Trust and how does it work?
A Medicaid Asset Protection Trust is an irrevocable trust. It can own almost any type of property asset and investment that you can own, and benefits clients in the following ways: by allowing them to transfer ownership of their home(s), cash, investment accounts into the name of the trust.
- Removes assets from the client's name, thereby protecting the assets from Estate Recovery by Medicaid, nursing homes and other creditors;
- Reduces the client's countable resources, and increases the likelihood of qualifying for Medicaid benefits;
- Preserves the assets for the client's children, grandchildren and other heirs;
- Allows the client to continue to use any residence.
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