With well more than half of all American adults currently projected to need long-term care at some point in the future, the issue of nursing home costs has taken on even more importance in recent years. As anyone who’s followed the news knows, those costs have skyrocketed in the last several decades, and have reached the point where large numbers of Americans can expect to pay around $200 a day or more for their nursing home care. Obviously, most people won’t have those sorts of resources around to cover those costs – a fact that helps to explain the rising popularity of Medicaid planning.
If you’ve never considered the possibility that you might need any kind of government assistance at some point in the future, then maybe it’s time to at least think about this program. The fact is that millions of seniors across the country rely on Medicaid to cover at least some portion of their long-term care costs. So many older Americans now rely on Medicaid payments for nursing home costs that the program has become the number one payment source for those facilities. So, even if you have reservations about government benefit programs of that kind, rest assured that you wouldn’t be the only senior to ever rely on its help.
Why Are Costs So High?
Many people wonder why nursing home costs have risen so far, so fast. Put simply, this phenomenon is like that seen in all areas of health care. As health care costs continue to rise with each passing year, nursing home costs also rise. But even that tells only part of the story. To understand the full story, you must understand what makes nursing homes so special within the health care industry.
Because these care facilities are designed to accommodate seniors and others with long-term and complex medical needs, they need to maintain a staff of medical professionals on-site. These nurses are there to provide medicine and care on a round-the-clock basis. That’s expensive. In addition, seniors live longer than ever, and many of them arrive at these facilities with more expensive treatment needs than seniors of prior generations ever dreamed of having. Taking care of those needs requires not only competent medical staff, but state-of-the-art medical equipment and expensive medications. The bottom line: it’s more than a little surprising that nursing home expenses aren’t higher than they are.
Why Doesn’t Medicare Help?
That’s the $64,000 question for many seniors. Why doesn’t the program that they’ve paid into their entire lives cover their care when it advances to the long-term care stage? The answer is simple: it wasn’t designed to cover those costs. It will, under certain circumstances, cover up to 100 days of long-term care, but no more. Reasonable people can debate about whether the Medicare program should cover long-term care or not – but in the end. it really doesn’t matter. The only thing that matters is that we know that it does not provide that assistance. To get that help, you need Medicaid.
Why Do I Need Medicaid Planning?
You might think that getting Medicaid is as simple as just filling out some paperwork and signing your name on an application form. Well, that’s rarely the case. The program is based on income and assets, so eligibility can be a question mark for many Americans. Often, seniors have more than the $2,000 allowed by the program asset limits, and many make more income than the program allows. That can result in some pretty unpleasant options if you’re a senior in need of help:
- Pay for your own care until you’re destitute.
- Ask friends and family to help pay for care.
- Spend down your assets to get under the limits.
Unfortunately, none of those options truly enable seniors to do what they’d like to do: qualify for the benefits they need without losing all their assets to the government or the nursing home. That’s where Medicaid planning comes in!
What is Medicaid Planning?
Medicaid planning involves the reorganization of your estate assets in such a way that your overall estate value is reduced to the point where you can qualify for the benefits you need. This can be accomplished in a variety of different ways, and often uses one or more of the following planning tools:
- Spend down strategies to reduce your estate value by spending your assets on allowable purchases like home repairs, a new care, and so on.
- The use of an annuity to reduce your assets while still providing some income over time.
- The use of gifting strategies to remove assets from your estate and decrease your overall worth.
- Irrevocable trusts that can shelter assets from eligibility consideration, while protecting that wealth for the benefit of your loved ones and heirs.
As you might expect, these strategies can be quite complex, and are complicated by Medicaid’s five-year look-back power. Since improper transfers made within the five years prior to any Medicaid application can trigger eligibility penalties, it is important to ensure that gifts, spend-down efforts, and all planning strategies are conducted in a way that avoids those problems. For most people, however, these strategies are filled with landmines that can be difficult to avoid. The only way to ever be sure that your planning is on the right track is to rely on the sage counsel and assistance provided by an experienced attorney.
When it comes to Medicaid planning attorneys, Frank & Kraft, Attorneys at Law, has the experience and knowledge you need to ensure that you secure the eligibility you need to cover the rising costs of nursing home care. We’ll work alongside you to determine the best planning strategies for your circumstances, helping you to ensure eligibility even as we safeguard many of your assets so that your legacy remains intact. It’s never too early to begin to plan for your future Medicaid eligibility needs. To learn more about how we can help you cope with the high cost of your future long-term care needs, contact us at our website today or call us at (317) 684-1100.
Paul A. Kraft, Estate Planning Attorney
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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