FAQs About Long-Term Care Costs

This is a very good question because many people are surprised by the answer. The United States Department of Health and Human Services (DHHS) has stated that 70 percent of seniors will need some type of living assistance.

Just over half of elders will need paid long-term care eventually, and 35 percent will reside in nursing homes.

The primary purpose of the Medicare program is provide health insurance for seniors. Since most elders will need care that comes with a cost, you would assume that Medicare will cover it, but this is not the case.

It will pay for custodial care after an injury or illness when recovery is expected, but Medicare does not cover custodial care.

The costs are somewhat different each year as you might imagine, and they typically trend upward. This being stated, you can expect to pay $100,000 or more for a year in a nursing home in the Cincinnati area, and the median annual cost for an in-home caregiver is well over $50,000.

This is another question that has been answered by the Department of Health and Human Services. They have found that 48 percent need the care for less than a year, and 19 percent require care for between one and two years.

The figure is 21 percent for the 2 to 5 year range, and 13 percent of people that need paid care require the assistance for more than five years. Clearly, the costs can be staggering if you need care for an extended period of time, and the expenses can be doubled for married couples.

You can purchase long-term care insurance, but the numbers of companies that are offering it have been dwindling over recent years. The older you are, the more expensive it is, and the companies can raise the rates after you have purchased the coverage.

They also have a period of time that you have to wait out before they will start providing the benefit. It is typically 60 or 90 days, so you have to take this is the account. Many would say that long-term care insurance is not a very good investment all things considered.

Medicaid is a jointly administered federal/state government health insurance program that will pay for living assistance. You are probably aware of the fact it is a need-based program, so there is a $2000 limit on countable assets.

A home is not considered to be a countable asset, but this is deceiving. Medicaid is required to seek reimbursement from your estate if you use the program to pay for long-term care. As a result, they could place a lien on your home if it is in your possession at the time of your passing.

To protect your assets and gain eligibility if and when you need it, you could convey assets into an income only Medicaid trust. This would be an irrevocable trust, and you would not be able to act as the trustee or access the principal but you could receive distributions of the earnings.

After your death, the assets would not count, but you have to act in light of the five-year look back period. You have to complete all divestitures at least five years before you apply for Medicaid coverage.