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As many as 70% of Americans age 65 and older will need some form of long-term care at some point in their lives. While the average length of stay in a facility is 3.2 years, 20% of residents will need care for five years or more. Many people can live at home but need at-home care for an average of three years, according to the U.S. Department of Health and Human Services.
Creating a plan for long-term care is one of the most neglected parts of planning for aging. Planning is critical to protecting assets and receiving quality care. Paying for long-term care generally requires a variety of financial sources, including personal funds, insurance, government programs and private financing options.
Many Americans think that Medicaid will automatically rescue them if they need nursing home care. However, it is not that simple. The most common scenario occurs when a loved one has a medical event, is hospitalized, and needs care at a nursing home before they can return home or need caregiving at home.
How Can Families Plan for the Costs of Long-Term Care?
Long-term care insurance is often dismissed as too expensive. However, it can be a vital part of planning for nursing home care. Policies are less costly when the insured individuals are young and healthy. Many people wisely purchase these policies in their 40s and 50s. After 60, premium costs go up, and the likelihood of having a pre-existing condition can make purchasing insurance at any cost impossible.
Another option is Medicare. Medicare pays for some skilled nursing care. However, it is only for a limited number of days and only if the stay in the skilled nursing facility is an extension of a hospitalization paid for by Medicare. When the number of days expires, so does Medicare coverage.
If the individual plans to rely on Medicaid, they must plan well to ensure coverage. Medicaid has a five-year look-back period, where detailed financial records of the individual are reviewed to ensure that no assets have been transferred to qualify for Medicaid. If transfers have occurred, the individual or family must pay out-of-pocket for care for five years until the person becomes eligible.
A Medicaid Asset Protection Trust protects assets from being counted for Medicaid eligibility. The trust must be created and funded five years before the individual applies for Medicaid long-term care benefits. Another benefit is that the trust’s assets are protected if Medicaid seeks reimbursement for costs after the individual’s death.
Resource Planning for Long-Term Care
Finances and Medicaid eligibility are not the only things requiring planning as loved ones age and become infirm. Most communities have nursing home facilities and home healthcare agencies. However, they may have limited beds available for Medicaid patients or staffing shortages, making it challenging to hire healthcare aides.
It’s a good idea to ask friends, family members, or treating physicians about their experiences with local facilities and staffing sources before “crisis mode” is the only option. The more information one has in advance, the less stressful the experience will be for all concerned.
Still need help deciding which long-term care plan fits your estate planning needs? Book a call with Vick Law, P.C. today to update your plan to include long-term care options.
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