Long term care planning is a complex subject and with so many resources at our fingertips, it can sometimes be tough to determine the myths and the realities about the topic. Read on to learn the truth about long term care planning.
Fiction: I will never end up in a nursing home.
Of those Americans reaching age 65 in any year, 24% are expected to spend 12+ months in a nursing home. 57% percent will never enter a nursing home and 19% will spend less than a year in a nursing home. 9% will spend 5+ years. Long term care planning is a reality for many of us.
Fiction: An average nursing home costs $5,000 a month.
In Pennsylvania, typical nursing homes cost $10,000 a month. Long term care planning will help you plan for these costs.
Fiction: Medicare will pay for any long-term care costs I may have.
It will pay for up to 100 days of skilled nursing facility care if you meet the certain requirements, including: (1) you must have moved to the nursing home within 30 days of a hospital discharge, the hospital stay having lasted at least three days; and (2) you must receive a skilled level of care. Medicare pays entirely for the first 20 days and everything above a daily copayment for days 21-100. The copayment is generally covered by Medigap insurance.
Medicare pays for home health care on a part-time or intermittent basis. Part-time generally means up to 20 hours a week. You must require a skilled component to your care to get this coverage.
Fiction: Medicaid is a program only for “poor” people (not me).
In 2010, the total cost of nursing home care was approximately $342 billion. This amount was paid from the following sources:
- 41% Medicaid
- 20% Medicare
- 15% Out-of-Pocket
- 17% Miscellaneous
- 7% Private insurance
Fiction: To qualify for Medicaid I will have to give up my home.
False. You may keep your home as long as you intend to return to live there, no matter whether you really can or do.
Fiction: If my spouse enters a nursing home all our joint savings will have to be spent on his/her care.
You are entitled to keep half of your combined liquid savings up to $123,600 for 2018. There are some exceptions.
Fact AND Fiction: If I give money to my children I will be ineligible for Medicaid benefits for 60 months.
Maybe. You will be ineligible for 60 months for every penalized transfer. There are some exceptions.
Fact: If I apply for Medicaid, the Department of Human Services and the nursing home staff will reliably guide me through the process.
Yes, and in most cases their help will be sufficient. However, they may not know the intricacies of spousal impoverishment and other rules or be able to advise you on when to appeal a denial. You should be aware that applications for Medicaid require extensive documentation and can be time-consuming. Consult an attorney for assistance with long term care planning.
Fact AND Fiction: Legally I can only give $10,000 to each of my children each year.
You can give any amount, but have to report gifts in excess of $15,000/recipient/year ($30,000 if both husband and wife make the gift). The reporting requirement is not an issue for most people because an estate must be greater than $11 million to be taxable under federal law.
Fact AND Fiction: I can wait to do long term care planning until I/we gets sick.
Yes and no. Usually there are things that can be done even if no steps have been taken, but you will be much better off if you have taken long term care planning steps in advance.