When your children become adults in their own right, on the surface, it can seem like your responsibilities to will decrease considerably. This may or may not be true, because many middle-aged people have to start providing assistance to their aging parents.
In fact, there is an emerging phenomenon called the “sandwich generation.” This group is comprised of folks that are simultaneously caring for their parents while they are still intimately involved in the day to day lives of their children.
As the years pass, your parents may require a level of care that can only be provided by a professional. You should certainly be aware of this eventuality and be prepared to react accordingly.
Long-Term Care Expenses
Most senior citizens will qualify for Medicare as a source of health insurance when they are 65 years of age under currently existing laws. This program provides a strong underpinning, but there are out-of-pocket costs that beneficiaries must pay.
In addition to the contributions that must be made by insured individuals, there is a gaping hole in the coverage that directly impacts most seniors. Medicare will not pay for the custodial care that people receive in nursing homes assisted living facilities, and the program does not pay for in-home care
This is a very big deal, because long-term care costs are high and rising year-by-year. In the Cincinnati area, the median monthly charge for a private room in a nursing home was just under $10,000 in 2019. The average length of stay is 12 months, and married couples may face two different sets of nursing home bills.
The median rate for a month in a one-bedroom unit in an assisted living facility was $4245. You can expect to pay about $3000 a month for in-home care from a qualified home health aide.
What Can You Do?
These are some attention-getting statistics, but elder law attorneys specialize in the area of nursing home asset protection. Medicaid eligibility is a widely embraced solution, and it is possible if you take the right steps in advance.
Everyone is aware of the fact that this is a need-based program, so you cannot qualify for Medicaid if you have assets in your own name. To shape the right financial profile, people typically engage in a process that is often referred to as a Medicaid “spend down.”
The idea is to divest yourself of assets, but instead of lavish spending, you could choose to give gifts to your loved ones. You would essentially be giving them that inheritances in advance before you have to hand over the funds to a nursing home.
It is a bit more complicated than it may appear to be on the surface, because there is a five-year Medicaid look-back period. All of the divestitures must be completed at least five years before the application for Medicaid is submitted.
An income-only Medicaid trust is one approach that can be taken. The principal would not be counted, but the grantor would be able to receive income that is generated by the assets in the trust.
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