The Medicare program is the source of health insurance for almost all senior citizens, and the coverage is solid and affordable for the most part. There are out-of-pocket expenses, but most people that plan ahead for retirement effectively can manage them adequately.
Seven out of ten seniors will need living assistance eventually, and of course, some seniors get help for free from family members and friends. This being stated, according to the U.S. Department of Health and Human Services, 52 percent of elders will require paid care.
Since Medicare exists to address the medical needs of older Americans, and most seniors will incur long-term care bills, it would be logical to assume that Medicare will cover them. In fact, whether it is fair or not, this is not the case.
The program will pay for convalescent care, but it does not cover the custodial care that you would receive in a nursing home, and it does not pay for in-home care.
Long-Term Care Costs
We all know that a stay in a hospital is exorbitantly expensive, and a nursing home may not be quite as high, but you are still looking at a lot of money. The state of Ohio has determined that the average cost for a month in a nursing home is $6905 this year.
About half of the people that require paid long-term care need the assistance for more than a year, so the overall costs can be considerable. And of course, if you are married, you and your spouse may incur two different sets of nursing home expenses.
Can You Get Long-Term Care Insurance?
At one time, countless different companies offered long-term care insurance, but most of them have backed out of the marketplace. It is still available, but it is hard to recommend long-term care insurance when you understand all the facts.
As you would imagine, the premiums are based on your age, your gender, and your health. Older people have to pay some hefty premiums, and they can go up at any time.
Plus, there is another element that will make you think twice before you take out a long-term care insurance policy. If you make a claim, there is a waiting period before they will start to pay out a benefit, and it can be as long as 90 days.
Is There a Solution?
Medicaid was not intended to become the de facto source of long-term care insurance that most people rely on, but this is the way it worked out. This program will pay for custodial care, but it is a need-based benefit, so there is a $2000 asset limit.
You cannot decide to give gifts to your loved ones after you find out that you need long-term care because there is a five-year look back period. Your application will be denied if administrators find that you have divested yourself of assets during the previous five years.
If you are relying on income that is generated by your assets, you are not in a position to give the resources to your loved ones. Fortunately, there is a solution in the form of an income only, irrevocable Medicaid trust.
After you fund the trust, the assets would not count if you applied for Medicaid as long as you apply after the five-year look back period. Along the way, you could accept distributions of the trust’s earnings, but you would not be able to reach the principal.
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