As Cincinnati elder law attorneys, we assist clients that are preparing for the eventualities of aging. There is one very pressing elder law issue that everyone should be aware of when they are looking ahead toward the future. Under currently existing laws, when you are 65 years of age, you will qualify for Medicare. This will provide a health insurance underpinning, but there is a huge gap in the coverage that can yield devastating financial consequences.
Most Seniors Will Need Living Assistance
The United States Department of Health and Human Services maintains a very useful website called LongTermCare.gov. They provide many interesting statistics that are quite eye-opening to say the least. One of them is the fact that seven out of every 10 senior citizens will need long-term care at some point in time. Some will be able to receive the care that they need in their own homes, but many will ultimately reside in nursing homes and assisted living facilities.
Since Medicare exists to address the health care needs of senior citizens, it would be logical to assume that it would cover the custodial care that most elders will need eventually. In fact, whether it makes sense or not, Medicare does not pay for long-term care. This is very significant, because it is extremely expensive to spend time in a nursing home or assisted living community.
When you look at current long-term care costs in Cincinnati and around the country as a whole, the state of affairs is not very encouraging. Genworth Financial is a company that sells insurance products for senior citizens. Since this is their demographic, they do a great deal of research to keep a finger on the pulse of nursing home and assisted living costs. They share their data with the public on their website.
We have examined the figures for Cincinnati in 2017, because the 2018 figures have not been released at the time of this writing. Last year, the median annual cost for a private room in a Cincinnati nursing home was $105,759. A semi-private room came with a price tag of $90,703.
These numbers are enough to get your attention, but the dismal outlook does not stop there. Private room costs are expected to rise by 3 percent per year over the next five years, and they project a two percent per year increase for semi-private rooms. The annual growth rate for the cost of a one bedroom unit in an assisted living community is even larger. Last year, the annual median charge was $59,880, and this figure is projected to rise by 5 percent each year until 2023.
As you can see, long-term care expenses are exorbitant right now, but the figures could be much higher if you need long-term care 20 years from now. A couple of years in an assisted living facility followed by another year or so in a nursing home could consume all or most of the legacy that you have always intended to leave to your loved ones. This is especially true when you multiply the expenses by two for married couples.
Nursing Home Asset Protection
Fortunately, there are nursing home asset protection strategies that can be implemented. The Medicaid program will pay for long-term care, but you cannot gain eligibility if you have significant assets in your own name when you apply. To obtain Medicaid eligibility, many people will engage in a process called a “spend down.” Assets are given to loved ones or conveyed into an irrevocable Medicaid trust. These lifetime gifts are essentially inheritances bequeathed in advance.
When you hear about this possibility, an idea will naturally enter your consciousness. If you ever find out that you need long-term care, you can simply give assets to your loved ones and gain eligibility for Medicaid the next day. In fact, there is a rule in place to prevent reactive divestitures. You are penalized and your eligibility is delayed if you give away assets within five years of submitting your application. This is why advance planning is key if you want to be able to qualify for Medicaid at the right time without losing anything in the process.
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If you would like to learn more about Medicaid planning and other important elder law and estate planning matters, obtain your copy of our carefully constructed worksheet. It is being offered free of charge at the present time, and you can visit our estate planning worksheet download page to get all the details.