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While only 4% of Americans over 65 live in a nursing home at any given time, the reality is that 70% of people who reach the age of 65 will need long-term care at some point in their lives. That may mean an extended stay in a nursing home, care at home with paid assistance, or an assisted living facility. The prospect of needing long-term care is difficult to think about and even more difficult to talk about.
That difficult discussion is worth the effort, though. The reality is that by the time you need long term care, it’s possible you won’t have the capacity to plan or make arrangements for yourself. That means the burden of arranging—and paying for—your care will fall on your family. To avoid unnecessary stress for your loved ones, it’s important to consult with an elder law attorney about planning for long-term care, long before you need it.
Making Long-Term Care Planning Part of Your Estate Plan
If you have an estate plan, you probably created it with the goal of preserving assets for your family and making the difficult time after your death a little easier for them. You should take the same approach to long term care planning. Dealing with a parent’s physical frailty or mental incapacity is stressful, especially when decisions need to be made about their care.
One way to spare your family some stress in the event of your decline is by having durable financial and medical powers of attorney in place. These documents allow you to appoint someone to make decisions on your behalf if you can no longer make them for yourself. Without them, your family might have to spend time and money going to court in order to get authority to provide you the help you need.
Estate planning and long term care planning are closely related. If you haven’t made a plan for how to pay for nursing home or other care, the estate you worked so hard to accumulate and plan for may need to be liquidated to pay for your care. Nursing home care is expensive and can top more than $100,000 per year for a private room in some facilities. That can rapidly consume a lifetime’s savings. Other options, such as in-home care or assisted living, may be less costly but can still quickly diminish a nest egg.
There are options for legally protecting your assets from being consumed by long term care expenses. While there are almost always some protective measures that can be taken, you and your family have more options if you begin planning for the possibility of care while you are still healthy and have your faculties. You can not only reduce the financial burden of caregiving on your family, but achieve peace of mind for both them and yourself that a long term care plan is in place if needed.
Options to Help Pay for Long-Term Care
In general, the earlier you start planning for the possibility of long term care, the better you can protect your assets for your family and access other resources to pay for care. However, even if you didn’t plan as early as you should have, an elder law attorney may be able to help you with financial planning for care.
One option for those who begin planning for care well before they need it is long-term care insurance. In addition to paying for nursing home care, long-term care insurance may cover the cost of assisted living and care in your own home, as well as hospice care. Some policies even cover expenses for respite care, so that if you are being cared for by family members, they can take time off to recharge. If you have ever been a caregiver yourself, you know how important that is. In addition to traditional long-term care insurance, there are newer options such as “partnership” insurance and “hybrid” long-term insurance plans.
In addition to various long-term care insurance options, there are other options to help mitigate the financial burden of care, including veterans’ benefits. Medicaid is available to pay for pre-nursing home care and for nursing home level care, but only if the beneficiary has “spent down” assets and income. However, there are many ways to legally shield assets from being “countable” for Medicaid purposes. That means you can preserve your hard-earned estate for your family, including a spouse who does not require nursing home care or an adult child who has lived with you and served as your caretaker.
You should not attempt to protect assets from Medicaid without an attorney’s help. Taking measures such as transferring assets to family members for less than their fair market value can backfire on you. Your family members will discover that the VA and the state Medicaid program “look back” at asset transfers for years prior to a Medicaid application. Improper transfers to avoid counting assets toward Medicaid eligibility can actually result in becoming ineligible for benefits for months or even years.
The bottom line is this: there’s a reasonably good chance you will need long term care at some point, and you should plan for that possibility as soon as possible. An experienced Michigan elder law attorney can assist you with Medicaid planning and elder transitions planning to make sure you get the care that is right for you without burdening your family. The sooner you get your estate plan and long term care plan in order, the more options you will have and the more assets you can protect.
The best time to plan for long term care needs is yesterday. The second-best time is today. To learn more about planning for long term care, contact Estate Planning & Elder Law Services to schedule a consultation.