When you sit down to work on creating a comprehensive estate plan there will likely be several important goals and objectives you wish to incorporate into your plan. If you do not already have nursing home planning on that list, it should be. One of the most common mistakes people make when creating or updating an estate plan is failing to include nursing home planning, or waiting too late to get started on it. Understanding why nursing home planning is so important may help you avoid making that mistake.
Your Odds of Spending Time in a Nursing Home Are High
One of the most important reasons to include nursing home planning in your estate plan is the simple fact that your odds of spending time in a nursing home are fairly high – and they increase every year you are alive. When you enter your retirement years at around age 65 you already stand a 50 percent chance of needing long-term care (LTC) at some point before your death. Each year that figure increases. BY age 85, your odds of needing LTC will have increased to a 75 percent chance. Keep in mind as well that if you are married, your spouse has the same odds as you of needing nursing home care. The increase in the number of people suffering from Alzheimer’s is one of the reasons why your odds of needing LTC are so high. One in three seniors dies with Alzheimer’s or some other form of age related dementia.
Can You Afford Nursing Home Care?
Knowing that you may need nursing home care in the future, however, is not the driving force for including nursing home planning in your estate plan. The cost of that care is the primary reason why you need to plan ahead. As of 2016, the average cost of a year in an LTC facility across the nation ran around $80,000 and the average length of stay was 2.5 years. Consequently, the average LTC bill for 2016 was $200,000. That figure is certainly substantial enough to cause the average person to worry; however, if you are a New Hampshire or Massachusetts resident you have even more reason to be concerned. In New Hampshire, the average yearly cost was over $120,000 and in Massachusetts over $140,000, bring the average LTC bill in those states to over $300,000 and $350,000 respectively – and those figures are if you needed LTC today! BY the time you actually need the care, the cost will have risen even more.
Who Will Pay for Your Nursing Home Costs?
If you are fortunate enough to have excellent health care insurance, you may still not see the need to worry about your future nursing home needs. Unfortunately, however, most private health insurance plans do not cover LTC unless you chose to pay an additional premium for LTC insurance. Although Medicare will cover most of your healthcare expenses as a senior, it will not cover LTC costs except for a short period of time under very narrow circumstances. Although LTC insurance is an option, it can be an expensive one. Furthermore, you must pay those high premiums every year for insurance you may never need. For over half of the seniors currently in a nursing home Medicaid is the solution.
Nursing Home Planning includes Medicaid Planning
Medicaid will help cover your nursing home expenses if you qualify for Medicaid benefits. If you fail to plan ahead, however, you may lose valuable assets before you meet the eligibility requirements. The reason for this is that Medicaid uses both an income and an asset limit when determining eligibility. The “countable resources” limit for an individual applicant in most states is only $2,000. That means that if the value of your countable resources (non-exempt assets) exceeds $2,000 your application will be denied. To will have to embark on a Medicaid “spend-down” campaign at that point to get the value of your assets down below the program limit. In practical terms, this means you will have to rely on those assets to pay your LTC expenses during that spend-down period. Once you understand how vulnerable your hard-earned assets are you will likely be ready to get started on your Medicaid planning component.
Contact Nursing Home Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about nursing home planning, contact the experienced Medicaid planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
Daniel DeBruyckere
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