Nearly 10 million Americans needed long-term care by the year 2010, according to the Department of Health and Human Services.70% of people turning 65 will need long-term care at some point in their lives, and many of them will require care from a nursing home.It's never too late to plan for how you will pay for care, protect your assets and qualify for Medicaid.
Step 1: Use private money.
If you have a lot of money, you may be able to pay for private in- home services out of pocket.It is not likely that you would be able to reduce your wealth to qualify for Medicaid.The average cost for long-term nursing home care is between $6,000 and $9,000 a month.It may be cheaper for you to pay for in- home care which can cost $21 an hour.If you know in advance that you will use your own assets to pay for long-term care, it's a good idea to set your funds aside before you need them.
Step 2: Stay with family.
Informal and family care for people who were ill, disabled or elderly was provided by 65 million people in 2015.The services reduced the cost of care and kept people in their homes longer.If you only need assistance with certain things, ask a family member to help you out during the week or pay someone to come into your home.This will allow you to spend less money on long-term care.
Step 3: Pay with private insurance.
Most insurers don't cover long-term nursing home care, so you need to look closely at your private insurance policy.Most insurance policies limit nursing home care to 100 days after a hospital stay.Policies only cover short term nursing home stays where skilled care is required.It is unlikely that your insurance plan will cover long-term care where you only need assistance with activities of daily living, such as bathing, dressing or eating.
Step 4: Acquire long-term care insurance.
Long-term care insurance reimburses up to a certain amount for the cost of long term health care, including assistance with ADLs.It's a good idea to apply for this insurance by the time you're in your 40s because age and health are factors in determining the cost.Many elderly people may not be able to afford this insurance if they wait too long to get it.When determining the cost of long-term health insurance policies, insurers look at your age at the time you purchase the policy.On a daily basis, the policy will pay out the maximum amount.The policy will pay out the maximum number of days.Increasing for inflation is one of the add-ons to the policy.
Step 5: You should be able to qualify for Medicaid.
Medicaid is a federal program that is administered by each state.To qualify for Medicaid, you have to meet certain income and assets requirements, as the program was meant to protect low-income individuals.Medicaid provides the best possible support for long-term care costs.Most states limit a person's assets to $2,000 for an individual and $3,000 for a couple in order to qualify for Medicaid.If one spouse goes into a nursing care, for the purposes of Medicaid, the individual going into care can only have $2000 in non-exempt assets and the spouse remaining at home can keep half of the overall assets.To qualify for Medicaid, assets over half the value must be reduced.The rule is called the spousal impoverishment rule.Monthly income limits for Medicaid are set on a state-by-state basis.In New York, this amount is $825 a month for an individual and $1,209 for a couple.
Step 6: You should hire an attorney.
If you violate the rules, you can be disqualified from the program.You need an experienced elder law attorney.These attorneys can help you protect your assets and give you financial planning advice.It is always a good idea to start looking for an attorney with a referral from a friend or family member.You will be at ease when you meet the attorney for the first time.The National Association of Elder Law Attorneys can be used to locate elder law attorneys.You can find information about attorneys in your area on the website of the American Bar Association.Before you meet your attorney for the first time, make sure to explain your concerns, potential sources of income and the outcome that you want to see.Should you or your spouse need nursing home care, the attorney can work with you to come up with a financial plan that protects your assets.
Step 7: Make sure your community property is below the limit.
When you apply for Medicaid, the assets of you and your spouse are added together to determine your total amount of assets.If you accumulate too much of these assets, you won't be able to get Medicaid.Depending on your state, this limit can be as high as $119,200.
Step 8: Paying off debts will reduce your assets.
If you have assets greater than the maximum set by Medicaid, you should try to pay them down in order to qualify for the program.While certain assets are not counted towards your Medicaid thresholds, such as your family home or car, you may reduce the number of assets so that one spouse can qualify for the program.If you pay for medical care or in- home care, you can become eligible for Medicaid.Prepaying real estate taxes is one way to pay for household items.Pre-pay for funeral services.Paying off debt includes the mortgage, credit cards, or student loans.
Step 9: Purchase assets exempt under Medicaid to reduce your assets.
You can reduce your assets to qualify for Medicaid by purchasing items that Medicaid does not count towards your asset calculation.Furniture or appliances are exempt from Medicaid.At least one vehicle.The family home is where the spouse of the person applying for Medicaid, a child under the age of 21 and a disabled child of any age reside.Term life insurance policies.
Step 10: Transfer money into a trust.
With a Medicaid Asset Protection Trust, you transfer all of your assets to the trust and give up the ability to control the funds.The principal of the trust is protected and does not count towards your Medicaid asset total.Missouri case law states that trusts are subject to seizure.They believed the "Trust" would keep their property safe.This is not the case.You should use an attorney to set up the trust.Assets in the trust are subject to a five-year look back period.You and your spouse would have to assign someone else to act as Trustee for the trust.
Step 11: The five-year rule is dangerous.
In the five years prior to applying for Medicaid, Medicaid closely examines all transfers of assets.This is referred to as Medicaid's lookback provisions.If Medicaid determines that you conducted a non-exempt transfer, you can be ineligible for Medicaid for a number of years.Before attempting to transfer funds to qualify for Medicaid, you need to speak with an elder law attorney.Medicaid looks at all transfers made in the five years before you apply for Medicaid to see if they were made for less than fair market value.Some states require children to pay for the care of their indigent parents if they want to start the lookback time.Medicaid uses the average cost of a private nursing home in your area to calculate the penalty period.You are restricted by the number of days your asset transfer would have taken.
Step 12: To avoid penalties, transfer exempt assets.
There are a number of exceptions to Medicaid's lookback provision that would allow you to transfer certain assets and not be punished if you qualify for Medicaid and have Medicaid pay for your nursing home care.Transferring funds to your spouse is one of the exceptions.Assets are transferred to a blind or disabled child.Your blind or disabled child will have a trust in you.If the trust is established for the Medicaid application, it should be for a disabled person 65 years or younger.You can transfer your home to certain people and not be punished.These people include: your spouse, children under the age of 21, blind or disabled children, siblings who own a partial share in the home, and a child who has lived for two years to care for the parent.
Step 13: It is possible to create a life estate.
A life estate, also known as a Lady Bird deed, is a type of real estate transfer whereby a person gives or sells their home but retains the right to live in the home until they die or their spouse dies.People use this to protect the home as an asset from nursing homes and Medicaid, as well as a way to have the house skip the probate process.Some states do not consider homes part of a person's assets unless the home is worth a certain amount, which means that if you transfer your home under a life estate within 5 years, you will not meet any of the Medicaid requirements.