When you think about retirement planning, do you consider the potential impact of long-term care costs?

Most people are more focused on travel, leisure activities, and quality time with their families, and this is understandable.

Clearly, you want to think about the good times that you will enjoy during your golden years, but there is an unpleasant truth that you should address to preserve your legacy.

Medicare Gap

Most seniors will require long-term care, and more than one third of elders will reside in nursing homes. You may assume that Medicare would pay for a stay in a nursing home since so many seniors will require custodial care.

Many would say that it is not fair, but Medicare does not cover nursing home care or in-home care that is provided by a professional home health aide.

Long-Term Care Costs in Connecticut

Genworth Financial has been conducting in-depth research to gauge long-term care costs in the United States over the last several years. They update their figures annually, and their numbers for 2020 have been released.

The news is reasonably good with regard to the trajectory of nursing home costs, because they have not increased dramatically.

In 2020, the median annual cost for a semi-private room in a Connecticut nursing home was $155,125, which is a 1.8 percent increase over the 2019 figure. For a private room, the median cost was $167,900, and this represents an increase of .55 percent

The situation is entirely different when you look at the cost for a one-bedroom unit in an assisted living facility. During the 2020 calendar year, the median annual charge was $75,600, which is a whopping 29.1 percent increase.

Home health aide costs went up at a more moderate pace. The median charge for a full-time home health aide was $57,200 in 2020, and this represents a 4.17 percent increase.

We should point out the fact that the average length of stay for someone that is residing in a nursing home is 12 months. And of course, married couples should prepare for two separate sets of nursing home bills.

Nursing Home Asset Protection

These are some attention-getting statistics, and as elder law attorneys, we help people devise nursing home asset protection strategies. Medicaid will pay for long-term care, but since it is a need-based program, you can’t qualify if you have significant assets in your own name.

There are some assets that are not countable, including your home with an equity limit that will be $906,000 in 2021. We are not going to get into countable versus non-countable assets here, but you can check out this post to obtain more details.

To get countable assets out of your own name so you can qualify for Medicaid to pay for long-term care, you can convey resources into an irrevocable trust. You would not be able to act as the trustee, and you would not have access to the principal.

However, you could receive income that is generated by assets in the trust. If you apply for Medicaid, the resources in the trust would not count.

All this would be easy if you could fund the trust immediately after you recognize the fact that you need nursing home care, but it is complicated by the five-year look-back period. You have to fund the trust at least five years before you apply for Medicaid, so timing is key.

Attend a Free Seminar

We conduct seminars on an ongoing basis that are carefully crafted to convey a great deal of important information in an efficient manner. The sessions are offered free of charge, so this is a great way to invest a little bit of spare time.

You can see the schedule if you visit our seminar page, and when you identify the session you would like to attend, follow the simple instructions to register so we can reserve your spot.