Nursing home costs have been on the rise for many years now, and those increases show no sign of slowing any time soon. And while many Americans might assume that these costs have no real impact on their lives, the reality is that they affect nearly everyone in some way. Current estimates suggest that roughly seventy percent of today’s seniors will need nursing home costs eventually, while about half of all American adults can expect to someday require long-term care. Given that you too may someday require that care, it’s important to know how to deal with those rising nursing home costs.
Hope is Not a Strategy
The one thing that you cannot do is simply sit back and hope that everything will work out for you. Seniors are a particularly vulnerable group, with fewer options for obtaining new sources of income than younger, working adults. By the time you need nursing home care, chances are that you’ll have to work with whatever assets you’ve managed to accumulate, since there won’t be enough time left to increase your wealth to meet your long-term care needs. Whatever you do, don’t rely on wishful thinking.
Why Care Costs So Much
You may wonder why care costs so much, and whether you might somehow be able to get around those high expenses by finding cheaper alternatives. Nursing home care is expensive no matter where you go, and the only alternatives are long-term care solutions that generally don’t provide the same type of attention and service. When you need extensive, ongoing care, residence in a nursing home facility is really an option that can’t be replicated anywhere else.
Care costs are going to be due to a combination of factors. The main cause for the increased prices seniors pay today is the increased longevity of seniors and the fact that so many enter nursing homes with serious medical conditions like heart disease, diabetes, and other ailments that are expensive to treat. Add to that the general increase in medical care costs, and it’s easy to see why nursing home expenses have exploded in recent years.
Can You Pay for Care on Your Own?
One thought that might cross your mind is that you can simple dip into your savings to pay for the care you need. That’s a great option when you can afford it, but it’s also relatively uncommon. Nursing home costs can range between $7,000 and $10,000 a month, and many seniors require lengthy stays of several years or more. Unless you’ve amassed many hundreds of thousands of dollars in retirement savings, chances are that you won’t have the kind of cash sitting around. Granted, you could liquidate your family home and sell other assets to help pay those expenses – but most seniors would like to have something to leave behind for their heirs.
What About Medicare?
Many seniors might expect that Medicare will cover these costs. They become so accustomed to the program paying for other medical needs that it only seems logical to expect that it will cover long-term care costs as well. After all, American workers pay into the program their entire working lives, with the expectation that it will provide them with supplemental health coverage when they’re older. Sadly, however, that’s not the case when it comes to long-term care. Medicare will pay for up to 100 days of care in some situations, but it’s not a reliable payment source for any extended stay.
Long-Term Care Insurance
There is insurance for long-term care, but it’s rarely used. There are two main reasons for that lack of popularity. The first reason is related to a general lack of awareness about these policies. Put simply, most Americans simply don’t know that they can buy long-term care insurance. The more important deterrent to using this insurance, however, relates to its cost. Long-term care insurance is expensive, and that can make it cost-prohibitive for many average seniors.
Medicaid is the Answer
To get that long-term care, seniors need to look to programs like Medicaid. This program for low-income Americans is now the single most important source for payments to the nation’s nursing homes, and covers the cost of long-term care for millions of the country’s seniors. Qualifying for benefits can be a challenge, however, since seniors need to meet exacting income and asset standards to achieve eligibility. The asset limits often pose the largest obstacle, since they require seniors to have no more than $2,000 in countable wealth to be eligible for long-term care benefits (if the nursing home patient is married, his or her spouse can keep additional assets).
Planning for Eligibility
The problem with Medicaid is that you could lose everything you’ve worked to create if you fail to properly plan for benefit eligibility years before you need it. Unless you are content to impoverish yourself to gain eligibility, you’ll want to secure your assets so that you can retain some wealth and still qualify for those benefits. And since the program’s five-year look-back rule can result in penalties if you try to transfer assets within five years of your application date, any serious asset protection should take place long before you need care.
Medicaid planning can help you to organize your assets in a way that protects them from nursing home costs. Using gifting strategies, irrevocable trusts, and other techniques, an estate planning and elder law attorney can help you to safeguard many of your assets while securing the Medicaid eligibility that you will need later in life.
Don’t wait until you need Medicaid to start planning for your eligibility. If you have any doubts about your future ability to pay for that care yourself, and want to avoid being reduced to poverty by skyrocketing nursing home costs, then the time to act is now. The Michigan attorneys at Biddinger & Estelle, PC can help you to deal with rising nursing home costs and ensure that you have the care you need when you reach your seniors years. To learn how we can help with your estate and Medicaid planning needs so that you’re not left scrambling for answers later in life, contact us online or call us today at (989) 872-5601.
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