One of the challenging things about aging responsibly is that you have to anticipate future eventualities. Unfortunately, they are not always pleasant, but proactive planning can make a difficult situation much more manageable.
This dynamic enters the picture when it comes to long-term care planning. A lot of people assume that they will always be able to take care of all their own needs. However, when you look at the facts, a different picture emerges.
Government Statistics
The United States Department of Health and Human Services has stated that 70 percent of seniors will need some form of living assistance. Over half of them will incur long-term care expenses, and about one-third will spend time in nursing homes.
To put this into perspective, you have to look at life spans for seniors. Once you reach the age of 67, your anticipated longevity is 87 years if you are a woman, and it is 85 years for a man.
When you are an active senior, you probably will be able to function as usual. At the same time, life can be quite a bit different when you are an octogenarian.
Medicare Misconception
Medicare was created to provide health insurance safeguards for seniors. Since most elders will need long-term care, you would not be off-base to assume that Medicare must cover it. In fact, living assistance is considered to be custodial care, and Medicare won’t pay for this type of care.
Long-Term Care Costs
Nursing homes and in-home caregivers are very expensive all around the country. In Glastonbury and Westport, Connecticut, where we have offices, the costs are considerably higher than the national averages.
According to Genworth Financial, you’re looking at a median annual charge exceeding $220,000 for a private room in a Westport area nursing home. This is a lot of money to come up with late in your life, and married couples could be forced to deal with two sets of bills.
The Medicaid Solution
Medicaid is another government health insurance program that extends to custodial care. Since it is intended for people with limited resources, the asset limit is $1,600 in Connecticut in 2025.
This can seem like a dealbreaker, but a nursing home asset protection strategy can be implemented when you work with an elder law attorney with an eye on the future.
Irrevocable, Income-Only Trust
To set your sights on future Medicaid eligibility without impacting your lifestyle, you could potentially create an income-only Medicaid trust. This would be an irrevocable trust, so you would surrender access to the principal once you fund the trust.
Many seniors rely on income that is generated by their invested assets. They have no intention of liquidating the principal that is the source of their income. If you’re in this group, funding the trust really wouldn’t impact your day-to-day situation at all.
As long as you fund the trust at least five years before you apply for Medicaid, the principal would not count. In the meantime, you can receive the earnings that are generated by the assets in the trust.
This can be the ideal solution for many people, but advance planning is key because of the five-year look-back period. If you transfer assets out of your name within 60 months of your application date, you are penalized, and your eligibility is delayed.
Take Action Today!
When you implement a nursing home asset protection strategy in advance, you can go forward with peace of mind. As we have stated, we have elder law offices in Glastonbury and Westport, Connecticut, and you can call us at 860-548-1000 to schedule a consultation.
There is a contact form on this site that you can use to send us a message, and we invite you to join us at an upcoming seminar if you would like to learn more.
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