You should take a holistic approach when you are looking ahead toward your active retirement years and the twilight years that will follow. At first, the goal is to enjoy your freedom, spend quality time with your family, and cross things off your bucket list.
As the years pass, you may find that you need help with your activities of daily living. According to the United States Department of Health and Human Services, nearly three-fourths of seniors will need long-term care, and over half will require paid living assistance.
Aging in Place
In a perfect world, most people would probably prefer to remain in their own homes, even if they have physical limitations. At the same time, assisted living facilities are specially designed to make life easier for people with mobility challenges.
Over the last couple of decades, aging in place has become more and more popular, and technology has helped it along. This is a building concept that involves modifications and the utilization of smart home technology to enable aging seniors to remain in their homes.
The initial design will reflect your current circumstances, and as time goes on, you can make adjustments if and when they become necessary. Some adult children that are acting as caregivers will modify their own homes to accommodate aging parents.
Financial Considerations
There are those that do not have family members nearby that are capable of providing the assistance that is needed. Other folks get care from people close to them for a while, and the caregivers are willing. But at some point, the necessary level of care is beyond their capabilities.
In-home health aides can be engaged, but they are quite expensive. In the Westport, Connecticut area, the median monthly charge for a home health aide in 2020 was $51,048 according to Genworth Financial.
Just over half of seniors that require paid living assistance receive the care for more than a year, and 34 percent are in the 2 to 5 year range. In-home care costs rose by eight percent last year, so it may be considerably more expensive 10 years from now.
This would not be much of an issue if Medicare covered custodial care, and most people assume that it does extend to living assistance. In fact, Medicare will not pay for in-home care or a stay in a nursing home.
Medicaid Home and Community-Based Services Waiver
The Medicaid program will pick up the tab for nursing home care, and the Medicaid Home and Community-Based Services Waiver will cover costs associated with a home health aide.
This is a need-based program, and the asset limit is $1600 here in the state of Connecticut. Theoretically, you could give your loved ones their inheritances in advance so you can qualify for Medicaid or the Medicaid waiver.
However, there is a five-year look back period. If you were to give gifts today, you would not be able to qualify for Medicaid for five years. You could make the move and hope for the best, but many people rely on income that is generated by the lion’s share of their assets.
There is a solution in the form of an irrevocable income only trust. You convey the income-producing assets into the trust, and you can accept distributions while you are living independently. The principal would no longer be accessible, but that’s the idea.
In addition to the assets to generate income, you can convey your home into the trust. Yes, you can qualify for Medicaid as a homeowner, but they can place a lien on the property during the Medicaid estate recovery phase after your passing.
It would be protected if it is held by the trust. If you apply for Medicaid or the Medicaid waiver at least five years after you fund of the trust, the assets would not count, the strategy would be successful.
Schedule a Life Care Planning Consultation!
If you are ready to work with an attorney to develop a plan for aging, we are here to help. You can set up an appointment at our elder care planning offices in Westport or Glastonbury, CT if you give us a call at 860-548-1000.
There is also a contact form on this website you can fill out if you would rather 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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