It seems like we are supposed to plan for so much these days. We plan for retirement. We plan for college tuition costs. These are, at least, the things we try to plan for and save for. Did you know that long-term care planning should be included as you look towards the future? The majority of people in the U.S. will need long-term care at some point in their lifetime and yet people still may not know that long-term care planning is actually a thing. Nursing home costs and other long-term care facilities can be exorbitant, to say the least. Without a plan in place, the lifetime of savings you have built up can quickly be erased by long-term care bills. So, what does long-term care planning look like? We will discuss it more here.
What Is Long-Term Care Planning?
Long-term care planning is, as it suggests, putting a plan in place for covering the cost of long-term care. While this may seem such a distant and uncertain thing to plan for, know that it is more likely than not that you will need long-term care sometime in your life and planning earlier means that you will have more options.
Because of the high cost of long-term care, it is unlikely that most people will be able to cover it out of pocket. Some people may choose to purchase long-term care insurance, but the monthly premiums can be significant and may not fit into everyone’s budgets. Furthermore, there are several things that may exclude purchasing long-term care insurance as an option. It may not be available to you if you are in advanced years of age or have certain disqualifying preexisting conditions.
Some people may think that Medicare will cover the cost of long-term care, but this is simply not the case. Medicare may provide coverage for very limited nursing home stays, but it will not be much help when it comes to covering the cost of long-term care. Medicaid, on the other hand, may be the best option for long-term care coverage for many people. This means long-term care planning will commonly be Medicaid planning.
Medicaid has strict income and asset requirements in order to qualify for benefits. A needs-based government benefits program, Medicaid places limits on the amount of assets and financial resources a person can have and still qualify for benefits. Without proper plans in place, a person may enter a long-term care facility, pay out of pocket for as long as assets and savings hold out, and then qualify for Medicaid after everything has dwindled down to low enough levels. This does not have to be the case with a plan in place!
Through the use of trusts and other legal tools, your assets can be protected and removed from the Medicaid calculation. You can preserve your assets and avoid the Medicaid spend-down. Time is of the essence, however. Medicaid has a five-year lookback period which means that transferred assets may result in a penalty. Planning early gives you the widest range of options while waiting until the last minute may prove to be very costly. Waiting until the last minute to start planning for long-term care doesn’t mean you are out of options – it just means that some of the more desirable options will no longer work.
Elder Law Attorneys
The time is now to plan for long-term care. The dedicated elder law team at Palmer & Slay is here to help. Contact us today.