Few people look forward to growing old. Fewer still enjoy planning for the physical, mental, and practical consequences of the natural aging process. Failing to plan for your own aging process, however, could result in additional unwanted consequences. One aspect of your retirement years that should be included in your overall estate plan is nursing home planning. Like most people, you are likely hoping that a nursing home will not be necessary; however, there is simply no way to know ahead of time whether that will be the case or not. Because either you or your spouse could end up in a nursing home, nursing home planning should be included in your estate plan for several reasons.
The Natural Aging Process
You can worry about it, try to stop it, or simply ignore it but at the end of the day, we all go through the same basic natural aging process. While the average life expectancy of an American has almost doubled in the last century, a way to halt, or even significantly slow down the physical and mental impact of the natural aging process has yet to be found. The best strategy, therefore, is to plan accordingly.
Nursing Home Care – Will You Need It?
If only we all had our own crystal ball to tell us whether we will need long-term care (LTC), life would be so much simpler. Alas, we don’t have a crystal ball but we have some useful statistics that can help. When you enter your retirement years around age 65 you will already stand a one in two chance of eventually needing LTC. The longer you live, the greater the chance of needing some type of LTC. AT age 85, for example, your odds of yet needing LTC will have increased to 75 percent. Keep in mind that if you are married, your spouse shares the same odds.
The Cost of Care
Accepting the likelihood that you will need nursing home care in the future doesn’t completely explain the need to include nursing home planning in your estate plan. For that, we start with the cost of LTC. Nationwide, the average cost of a year in LTC for 2017 was just over $80,000 and the average length of stay 2.5 years, putting the average LTC bill at $200,000. If you are a New Hampshire or Massachusetts resident you can expect to pay considerably more than the national average at $125,000 and $150,000 per year respectively. While the cost of nursing home care is staggering, the real issue is that neither Medicare nor most basic health insurance policies will cover costs associated with LTC. Unless you can afford to cover your nursing home care out of pocket, you will need to plan ahead by incorporating Medicaid planning strategies into your estate plan.
Medicaid is a federally funded (primarily) health insurance program that does cover LTC expenses for program participants. Qualifying for Medicaid, however, can be tricky because both your income and your assets will be considered. Like many seniors, your non-exempt assets may exceed the eligibility threshold, causing your application to be denied. At that point, your hard-earned assets are at risk because you will need to rely on them to cover your nursing home expenses.
Nursing Home Planning
The key to protect your assets and getting help with the high cost of nursing home care should you need it in the future is to include nursing home planning in your comprehensive estate. Doing so will ensure that your assets are safe and that you qualify for Medicaid if you need it. Planning ahead is crucial, however, because Medicaid uses a five-year look-back period that effectively discounts any assets transfers made for less than fair market value for the five-year period leading up to your application date.
Contact Nursing Home Planning Lawyers
For more information, please sign up for one of our upcoming FREE seminars. If you have additional questions or concerns about nursing home expenses or nursing home planning, contact the experienced New Hampshire and Massachusetts nursing home planning lawyers at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
Daniel DeBruyckere
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