Making Sense Of Long-Term Care

Why don’t more people plan for long-term care? It’s probably one of the more difficult items to plan for due to the cost, the complexity and anxiety that comes with the thought of aging. Most people I talk to figure they’ll age gracefully, never leave their home and get in-home health care. While that is possible in more cases than ever today, nursing homes are at 92% occupancy in Pennsylvania and new ones continue to be built.

I’ve never talked to anyone who tells me they’re looking forward to going into a nursing home or who even wants to contemplate it. But for some folks, it’s a reality that they will face at some point. The average stay in a nursing home is 2-3 years, but there are always outliers.

Here are some points to consider when planning for long-term care. Please keep in mind that this is a general, very brief article on long-term care planning. The subject is complex, and varies for each person and family. The most important step you can take, if you haven’t considered long-term care planning but you’re concerned about it, is to schedule a meeting with me to discuss your unique circumstances.
Long-term care insurance becomes more difficult to buy and more expensive every year. Fewer insurance companies are selling it, and there’s a limited window of opportunity where it makes sense to purchase. Today, we have alternative insurance products—namely, universal life insurance (whole life insurance)—in which most of the death benefit can be used towards long-term care if you need it. We can explore the options with you in our office.
Medicaid is designed for individuals who do not have the means to pay for long-term care (mostly for nursing homes, not assisted living). Medicaid currently has a complicated formula to determine eligibility, including a 5-year lookback period for gifting of assets. If your estate is worth $100,000 and you gift all of it a year before you go into a nursing home, you would not be eligible for Medicaid. You must be careful about gifting and work with an attorney and financial planner when making gifts.

As stated above, Medicaid has a complicated formula for eligibility. If you plan ahead, you can potentially preserve at least a portion of your estate. The planning options are varied and depend on age, estate net worth, types of assets and other factors including family dynamics. A common planning method is to use a special Medicaid Trust to protect the assets while you’re living, but ensure they don’t get spent down on the nursing home. This strategy only works if you’ve sufficiently planned ahead, so if this sounds appealing – don’t dawdle.
Depending on the situation, if you’re about to enter a nursing home and have not done any planning, all hope may not be lost. There may be various strategies to employ to preserve at least some of the estate. My advice is to always seek an elder law attorney like myself in these situations. My BEST advice is to plan in advance instead of waiting until the last minute. An ounce of prevention… so they say.
A good way to wrap this up is to say that the two top things that my clients hate most are nursing homes and the I.R.S. I know that long-term care planning is probably the last thing that you want to focus on, because it’s scary, it’s depressing and it’s costly. As we always say, hope for the best and plan for the worst.

Also, I would caution you to be careful what you read online about long-term care and elder planning. There’s a ton of information, but a lot of it varies state by state, even county to county. Planning is very dependent upon your individual circumstances – zip code included! Again, if you are interested in discussing planning, you should sit down with an attorney like myself. Planning = Peace of mind.