Nursing Home Planning

The average cost of a nursing home in the Massachusetts and the Merrimack Valley is around $14,000 per month.  That’s over $168,000 per year, a number that continues to grow.

How would you pay for a loved ones care if they suddenly were in need of nursing home care?

The two most common ways nursing home expenses are paid for are:

  1. Use all of your hard earned money to pay for your care or the care of a loved one; or
  2. Qualify for Medicaid.

In order to qualify for the government program, Medicaid, you have to nearly be broke.  For a single person this means that if you were in need of nursing home care, and you hadn’t properly planned ahead, your family would have to use all of your assets to pay for your care until you only had $2,000 left in your name.  If you are a married couple, and you haven’t properly planned ahead,  and there is a need for a spouse to go into a nursing home the healthy spouse can keep around $126,000 in assets.  (There are also special rules for the home that apply.)

There are three different types of planning tools used when protecting assets from a nursing home.  The tools are:

  • Long Term Care Insurance;
  • Irrevocable Trusts; and
  • Revocable Trusts.

Long Term Care Insurance

Long Term Care Insurance is a great supplement to your estate plan if it is feasible and if you can qualify for the policy.  Long Term Care Insurance has an added benefit by helping to pay for things that Medicaid does not. Most policies contribute to not only nursing home costs, but also assisted living and in home care.  While having Long Term Care Insurance doesn’t negate the need for an effective estate plan, it is definitely a great supplement to your plan if it makes sense for you and your family.

Irrevocable Trust (Medicaid Trust)

Irrevocable Trusts are often used as a pre-planning tool for protecting assets from having to be used for your long term care in a nursing home. This is the type of trust where you put your assets in, you wait five years (*Medicaid look back period), and after five years if you had to go into a nursing home these assets would not be counted in deciding whether or not you qualify for Medicaid.  This type of planning typically requires giving up control of your assets and also the right to benefit from the assets you put in this type of trust.  You may also have some tax issues depending on what type of assets you own, when you put the assets in the name of the Irrevocable Trust.  While this is a great estate planning tool for those concerned about nursing home expenses, we need to have a more thorough discussion with you to make sure you are comfortable with this type of plan, comfortable with someone else controlling your assets, and comfortable giving up the right to benefit from your assets for your lifetime.

Revocable Trust

A Revocable Trust doesn’t in and of itself protect assets from a nursing home.  It is used to keep your options open in the event there is an incapacity.  Through the use of a properly drafted Revocable Trust, you can give your family the ability to protect some, or all of your assets in the event there is a need for nursing home care.  This type of trust is a perfect option for people who want to maintain control of their assets, but want to give their family the ability to protect some assets in the future, in the event a crisis occurs.

To determine which strategy makes the most sense for you and your family we need to have an in-depth discussion with you to learn more about your family dynamics, your assets and your goals.

To learn more about Medicaid Planning and to discuss the options available to you, please contact our office for a personal consultation or join us for one of our upcoming seminars or webinars.

*Medicaid Look Back Period- Regardless of what type of plan you choose, when an incapacity occurs, and you are trying to qualify for Medicaid, an application has to be completed.  Medicaid will then conduct an audit regarding what assets you have owned in the prior five years to determine whether you qualify or not.  There are many strategies that can help you qualify for Medicaid, without having to worry about what you owned five years before.  Medicaid can be confusing for people, but we are here to guide you through nuances of the Medicaid qualification process.

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