The costs associated with long-term care are extremely high and rising, and this is something you really have to take into consideration when you are planning for the future. In 2010, it cost nearly $40,000 to spend a year in an assisted-living facility on average in the United States, and the charge for a single room in a nursing home averaged over $83,500. The average stay for someone who resides in a nursing home is about 2-1/2 years.
These numbers are clearly attention-getting, but just how likely is it that you will spend some time in a long-term care facility? Statistics indicate that approximately 40% of seniors will do so, and 25% of the oldest old, people 85 years of age and up, are residing in a nursing home at any given time. So the possibility that you will someday need long-term care is quite real indeed.
Many people are under the impression that all of their health care needs will be met by Medicare once the reach the age of 65, but this is not the case. Medicare does not cover long-term care, but Medicaid does. Medicaid is technically intended to provide access to health care to people who can’t afford it on their own, but at this point many senior citizens rely on it to pay for long-term care. In order to meet the eligibility requirements some seniors must “spend down” their assets to bring them within allowable Medicaid parameters.
One way of doing this is by giving gifts to your loved ones. However, Medicaid rules include a five-year “look back” period. This means that you’ll be penalized for any gifts that you have given within five years of applying for Medicaid. The penalty is calculated based on the average cost of long-term care in your state and the amount of the gifts.
So, the sooner that you recognize that you’re going to need to utilize Medicaid should long-term care become necessary the better, because it takes some careful and precise long-term planning to optimize your resources while gaining Medicaid eligibility.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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