Your Basic Guide to Long-Term Care & Estate Planning
Planning for a skilled nursing facility (SNF) or nursing home stay is a subject most people do not want to talk or think about. Those individuals approaching retirement believe that no matter their age, nursing home care is at least 10 years away.
However, planning for the possibility you or a spouse may have to utilize the services of SNF is a real possibility as you age and planning for that event can save you and your family thousands of dollars.
This blog will give readers a very simple version of qualifying for Medicare and Medicaid and when to begin planning your estate. This is not meant to be legal advice, and for more information contact an elder or estate planning professional in your area.
Medicare & Medicaid:
Medicare is the federal health insurance program designed for seniors and those with disabilities. If you have been admitted to a hospital and are referred to a SNF for rehabilitation, then Medicare will pay for 100% of the services for the first 20 days, after which a 20% co-pay will apply.
Medicaid is the federal insurance program that is administered by each state. To qualify for Medicaid, recipients must meet financial requirements. It is these requirements that a person receiving Medicaid must meet that confuses many people as they think about planning for a SNF stay.
To qualify for a Medicaid, applicants must spend down assets to no more than $2,000. What determines spending down to that amount falls into two categories: countable and exempt assets.
The countable assets are those assets a person must “spend down” to qualify for Medicaid. Some of the countable assets include cash, money market accounts, stocks, bonds, certificates of deposit (CDs), Individual Retirement Accounts (IRAs), 401ks, real estate that is not one’s primary residence, property and more.
Exempt assets include a person’s residence (if there is a remaining spouse or the person intends to return home), household goods, personal items, one automobile, group/term life insurance policies, prepaid funeral, and related expenses.
Again, these lists are not comprehensive and serve only as a guide to begin your own research.
There are asset rules for a spouse who remains at home. Basically, the countable assets of both spouses are counted together and divided in half. The at-home spouse remains in the home with all the possessions, one automobile and cash assets up to a predefined amount.
Some ideas for spending down to meet Medicaid’s eligibility are paying for funeral expenses, paying off debt, making home improvements or buying an automobile.
Five Year Look Back:
To qualify for Medicaid, there is a period of five years that will be under review. For example, if Mary gifts her son $10,000 on March 15, 2010, and doesn’t need SNF care until April 2015 then Mary will not have to mark that money as a countable asset. However, if Mary needed to qualify for Medicaid before March 15, 2015, then that money would need to be paid back to Mary and used as private pay until she qualifies for Medicaid.
Planning for the Future:
While most people do not believe they will need long-term care, research from the Pennsylvania Health Care Association, which represents SNFs in PA, provide a different picture. Their research found:
• Most people will need some form of long-term services and supports in their lifetime, including assistance with daily activities such as bathing and dressing, because of a physical impairment or a cognitive impairment like Alzheimer’s disease.
• An estimated 70% of people currently turning 65 will require long-term care in their lifetime, and they will receive care for an average of three years.
• Eighteen percent of all seniors will require more than one year in a nursing facility.
In summary, most people will need some type of SNF care in their lifetime. Planning ahead by consulting an estate planner can assist you by ensuring the financial needs of your family and long-term care are met.
Author: Brandon S. Totten
Community Relations Manager, AMFM Nursing & Rehabilitation Centers