Elder law attorneys assist clients that want to address the eventualities of aging from a legal and financial perspective. There is one issue that stands above the rest, and it is sometimes overlooked until it is too late to do anything about it.
Aging and Long-Term Care
Your life expectancy is into your mid-to-late 80s if you live long enough to collect your full Social Security benefit. This is an eye-opening statistic, and there are challenges that you may face when you are an octogenarian.
Over 30 percent of people that are in this age group contract Alzheimer’s disease, and many people with Alzheimer’s will enter nursing homes. In all, 35 percent of seniors will eventually spend time in nursing facilities according to the United States Department of Health and Human Services.
Others will receive the help that they need in their own homes from home health aides.
According to the 2021 Genworth Financial Cost of Care Survey, the median monthly charge for a private room in a Cincinnati area nursing home was $8760. The median cost for a home health aide was $5148 a month last year.
This is a lot of money to come up with after you have been retired for many years, and the costs can be doubled if you are married. Medicare does not pay for the custodial care that nursing homes and in-home caregivers provide, so there is no built-in solution.
The Medicaid program will cover custodial care expenses, but it is need-based, so there is a $2000 limit on assets. Your home is not counted, but this is a temporary fix, because Medicaid could place a lien on your home if it is part of your estate at the time of your passing.
When a married person is applying for Medicaid while their spouse is still going to live at home, the healthy spouse can keep half of the couple’s assets up to a limit. This is called the Community Spouse Resource Allowance (CSRA).
In Ohio in 2022, the maximum CSRA is $137,400, and the minimum is $27,480. The healthy spouse can also qualify for a Monthly Maintenance Needs Allowance. This gives them the ability to accept income that is earmarked for their spouse.
The maximum Monthly Maintenance Needs Allowance this year is $3435, and the minimum is $2177.50. If a healthy spouse is not relying on the income, it must be contributed toward the cost of the care that is being received with the exception of a $50 a month personal needs allowance.
Five-Year Look Back Period
You would logically consider giving your children their inheritances in advance after you find out that you need long-term care. Unfortunately, this is not the answer, because there is a five-year look back period.
If you transfer assets out of your name today, you would be ineligible for Medicaid for a period of five years. A lot of seniors rely on the income that they receive from assets that they have invested, so they would not be in a position to divest themselves of the income-producing assets.
Under these circumstances, you could establish and fund an income only Medicaid trust years before you think that you may need long-term care. You would be able to accept distributions of the earnings, but you would no longer be able to reach the principal.
After five years, the assets in the trust will not count if you apply for Medicaid to pay for long-term care. Plus, you can convey your home into the trust to protect it from Medicaid estate recovery, but you would be able to live in it as usual until you enter a long-term care facility.
We Are Here to Help!
Today is the day for action if you do not have a nursing home asset protection plan in place. You can schedule a consultation at our Cincinnati elder law office if you call us at 513-721-1513, and you can use our contact form to send us a message.