According to Caregiver.org, 8,357,100 people receive support from nursing homes, home health agencies, hospice, residential care communities and adult day care service centers annually. Most of those in nursing homes are elderly, with about 63 percent being age 65 or older. Further, the lifetime chances of either cognitive impairment or becoming physically disabled to the point where you can no longer manage your day-to-day living is 68 percent for those 65 and older.
Among those 65 and older, nearly 70 percent will develop a disability prior to their death, and more than a third will eventually enter a nursing home. Nearly a fifth of those over the age of 65 will incur more than $25,000 in out-of-pocket long-term costs prior to their death. In 2004—14 years ago—the average daily rate for a private room in a skilled nursing facility was $192 per day or $169 per day for a semi-private room. As you can imagine, those costs have increased since 2004.
Estate Planning a Necessity for the Elderly
As you can see, if you are an older American living in Kettering, Ohio, your chances of entering a nursing home are relatively high, and the costs of that nursing home are prohibitive for
most. In the state of Ohio, nursing home care can cost from $7,000-$10,000 per month, meaning a couple with one spouse in a nursing home could conceivably lose everything they have worked their entire life for within a single year. The options for paying for a nursing home include:
- Self-pay by using the home, savings, and retirement plan funds,
- Self-pay with private, long-term care insurance,
- Medicare, and
- Medicaid
Although many people in Kettering believe Medicare is an option for nursing home costs, in reality, it is not—at least not a long-term option. Medicare only covers the first 20 days of skilled nursing care plus an additional 80 days after your co-pay is met, and only if you meet the very stringent requirements. Kettering residents could purchase a long-term nursing home care insurance policy. However, such policies tend to be quite expensive. This leaves Medicaid as the only viable option for most Kettering residents who qualify.
Medicaid will confirm the person’s condition is deteriorated enough to justify the need for long-term care. The patient’s monthly income must be less than $2,163 (as of 2014 in Ohio) to qualify for Medicaid and those residents of Ohio who already receive SSI qualify to receive Medicaid for nursing home expenses. All of the monthly income of the ill spouse will be paid to the nursing home before Medicaid picks up the remainder of the costs. A healthy spouse’s income does not count for Medicaid purposes, however, bank accounts, retirement plans and real estate (other than the applicant’s home in some circumstances) are considered “non-exempt.”
Exempt assets include one vehicle, cemetery plots, and funeral contracts. Medicaid gifting rules are harsh; giving away money or assets to prevent Medicaid from taking them within the past five years prior to making a Medicaid application will render the applicant ineligible and may impose a penalty as well. However, carefully planned and implemented gifting, coupled with planning for payment of the long-term care costs during an ineligibility, is a planning technique our office uses on a regular basis to help families preserve wealth.
Estate Planning Tips Which Can Help with Medicaid and Nursing Home Expenses
A Kettering estate planning attorney can help you determine how to manage your assets for the future. As an example, you can pay off debts or tax obligations, and may be able to legally gift a portion of your money to your children or others you choose, although this does trigger a penalty period. Be aware, that estate planning for nursing home expenses is extremely complex and should never be a DIY plan. An Irrevocable Trust may be an option to “hold” gifted money, however, the terms of such a trust must be very carefully considered.
Discuss the nursing home issue with a Kettering, Ohio estate planning attorney from Lovett & House who will evaluate your assets, family needs, and health in order to prepare a comprehensive estate plan which will benefit not only your loved ones but also yourself in the event of a disability or illness.
