As elder law and estate planning attorneys, we can help you prepare for the future in a holistic manner. One stage leads to another, so it is important to meet the eventualities of aging head-on as you create a pragmatic plan for your twilight years.
Medicare Falls Short
If you work and pay taxes for at least 10 years, you will qualify for Medicare when you reach the age of 65 under currently existing laws. It should be noted that you would qualify if you have not met this requirement as long as your spouse has done so during his or her working career.
This program will provide a strong safety net throughout your senior years, but you should be prepared to pay out-of-pocket expenses. These would include deductibles, premiums, and co-insurance. When it comes to co-insurance, Medicare Part B only pays 80% of covered visits to doctors and outpatient care, and you have to take care of the rest.
Depending on your health and the extent of your resources, these costs may be manageable for you and your family. However, there is one missing piece to the coverage that can have an enormous impact on your legacy.
Medicare does not pay for a stay in a nursing home, and approximately four out of every 10 seniors will require this type of care eventually.
The cost will vary somewhat depending on the facility and its exact location. According to Genworth Financial research, the median annual charge for a private room in a Westport area nursing home was over $192,000 in 2019.
These numbers have been rising steadily year by year, so the costs may be much higher if you need long-term care in a couple of decades. You also have to consider the impact of two different rounds of nursing home expenses if you are married.
Medicaid Eligibility
Medicaid is a jointly administered federal/state government health insurance program that is intended to provide coverage for financially needy individuals and families. Since it is a need-based program, there is a $1600 limit on countable assets in Connecticut.
Unlike Medicare, this program will pay for the custodial care that you would receive in a nursing home. We will leave the fairness of this arrangement to the theoreticians, but on a practical level, you could take steps to gain Medicaid eligibility with future long-term care costs in mind.
Income-Only Medicaid Trust
To qualify for Medicaid to potentially pay for long-term care if you do in fact need it, you could convey assets that are countable into an income-only Medicaid trust. This would be an irrevocable trust, so you would not be able to change your mind and take back the assets, and the principal would not be accessible to you.
As the name would indicate, you could continue to receive income that is generated by assets that have been conveyed into the trust until and unless you apply for Medicaid.
It is important to take action at the ideal time because of the five-year look back period. You would have to fund the trust at least 60 months before you apply for Medicaid.
If you violate this rule, your eligibility would be delayed, and the length of the penalty would depend upon the amount of the divestitures. Simply put, if you parted with enough to pay for two years of nursing home care within this five-year window, your eligibility would be delayed by 24 months.
We Are Here to Help!
Our doors are open if you would like to discuss nursing home asset protection with a licensed elder law attorney. To schedule a consultation appointment, call us at 860-548-1000. We also have a contact page on this website that you can use to send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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