08
May
As an elder law firm, we help people concerned about long-term care costs. Unfortunately, there is inadequate awareness regarding the subject in general. With this in mind, let’s look at the long-term care situation and the potential consequences if you are unprepared.
Cold Hard Facts
First, to understand the importance of this matter, you need to know some things about living assistance for seniors. According to the United States Department of Health and Human Services, seven out of 10 people turning 65 today will need living assistance eventually.
Granted, some of these folks will be able to get the help they need from family members without incurring any costs. However, research has shown that about 32 percent of seniors will eventually reside in nursing facilities, and others will receive in-home care.
In all, just over half of elders will require paid long-term care at some point. Once you digest this fact, you can see that this is something that everyone should take seriously.
Greenville, SC Long-Term Care Costs
We practice in Greenville, South Carolina, and long-term care costs in our area are considerable. Genworth Financial has been keeping an eye on the cost of long-term care around the country for several years, and they have made projections for 2025.
The median charge for a private room in a Greenville area nursing home this year is almost $129,000. For an in-home health aide, you are looking at a median figure of just under $81,000 per year.
A little over 50 percent of people who receive paid care need the assistance for over a year, and 13 percent incur bills for more than five years. These are some potentially big numbers, and they can be doubled for married couples.
Medicare Won’t Help
Since most seniors will need long-term care, and Medicare is the health insurance solution for elders, you may assume it will cover living assistance. In fact, this is not the case. Medicare will pay for convalescent care, but it does not cover long-term custodial care.
Medicaid Eligibility
Medicaid is the widely embraced solution because it will extend to long-term care costs. Of course, it is a need-based program, so there is a low $2,000 limit.
This being stated, some things do not count, such as one vehicle, personal belongings, household effects, wedding rings, engagement rings, and heirloom jewelry.
Home Ownership
Technically, you can qualify for Medicaid as a homeowner with an equity limit of $730,000, but there is a Medicaid estate recovery mandate. If you’re in direct possession of a home as a Medicaid recipient, the program could put a lien on the property after your death.
Irrevocable, Income-Only Medicaid Trust
All the above can sound daunting, but there is a solution. You could convey your home and other assets to an irrevocable, income-only Medicaid trust. Once you fund the trust, you will no longer be able to access the principal.
The good news is that you could continue to receive income generated by assets held by the trust. As long as you fund the trust at least five years before you apply for Medicaid, the principal will not count.
Plus, your home would be protected from Medicaid estate recovery because it would not be part of your probate estate. From a legal perspective, it would belong to the trust, and it would be transferred to a beneficiary of your choosing.
Take Action Today!
We can help you create a holistic plan that prepares you for the eventualities of aging. To get started, call our Greenville, SC estate planning office at 864-268-8244 or send us a message through our contact page.
