Nursing home care in Pennsylvania is incredibly expensive. The cost of just one year in a nursing home can run up to $100,000. The average stay in a nursing home is generally between three to five years. Most seniors who need nursing home care need assistance from Medicaid, a federal government program, to be able to afford their care. Medicaid generally only provides assistance to seniors who can’t afford to pay for the nursing care on their own. This means that Medicaid will review a senior’s assets and finances to determine if their assets can be used to pay the nursing home or reimburse Medicaid.
Effective estate planning means understanding what assets Medicaid may seek to pay the nursing home bills and what steps can be taken to protect those assets from the reach of Medicaid. Assets that are not protected won’t be available for the senior’s spouse, children, or other heirs. Seniors (whether they are married or not) should review how to protect their assets now because Medicaid does have the right to look back at the transactions you made in the prior five years. This means if a senior waits until he/she needs to enter a nursing home, it’s too late.
A few initial key principles
Medicare does normally pay for most healthcare needs of a senior (normally, up to about 80%). Medicare, however, does not pay for long-term stays in a nursing home. This means seniors cannot rely on Medicare to protect their assets.
Seniors should consider purchasing long-term nursing home stay insurance. This insurance essentially pays for the nursing home expenses when the senior needs a nursing home. There are some key considerations. The insurance requires paying a monthly premium. There is a deductible. Normally, the insurance only pays for nursing home care for up to a preset term – such as five years. There may also be underwriting standards that make it difficult to afford the long-term care premiums. Other alternatives to insurance are annuities and other financial planning strategies that set aside money for nursing home expenses if nursing home care becomes necessary.
For most seniors, their safety net is Medicaid. To protect some or most of your assets from Medicaid, seniors should review asset protection strategies with an experienced Berks County elder law attorney.
The main goal of the senior is to protect the assets for others especially a spouse.
Common asset protection strategies
Skilled elder care planning lawyers review all possible strategies for protecting assets from nursing homes. Some of these strategies include:
- Understanding what assets Medicaid considers and what assets Medicaid doesn’t consider. Generally, Medicaid will allow some assets of the senior and a spouse to be set aside for making the eligibility qualification. For example, about ½ of the “countable” assets can be set aside for a spouse. An experienced elder care lawyer will explain how much of the equity in a home can be protected, whether a car can be protected, and what other assets such as retirement benefits Medicaid won’t consider. We’ll also explain what assets such as bank accounts Medicaid normally will consider.
- Using assets to pay legitimate expenses. The senior may be able to pay off some of his/her bills such as insurance costs, property taxes, income taxes, and other debts. It helps to pay off these debts as early as possible. These debts will normally have to be paid anyways – so by paying them off before the senior enters the nursing home, the assets the senior has are reduced by the amount of the bills that are paid.
- Giving away some of your assets while you are alive. Provided the assets are given away before the look-back period, these assets should be protected from Medicaid/nursing homes. Seniors can consider giving some of their wealth to children and others so they can enjoy it now instead of when they die – or not all if Medicaid seizes the assets.
- Placing the assets in a trust. There are some trusts such as special needs trusts and asset protection trusts that can be used for family members and loved ones that also place the assets out of the reach of Medicaid or other creditors. Generally, these trusts must be irrevocable.
- Investing in non-countable assets such as IRA accounts. Other investment options may also be available.
One other last-resort strategy may be a divorce.
At Antanavage Farbiarz, our elder care lawyers help seniors plan for physical and mental health challenges including the need to stay in a long-term care facility such as a nursing home. We’ll review the likely challenges, the legal documents you can use to protect your interests, and the strategies for maximizing the assets your family can enjoy. To review all your elder care planning needs including asset protection from Medicaid, contact Antanavage Farbiarz, PLLC, today.