When you have been active and capable during your middle-aged years, it can be hard to imagine a time when you will need help with your activities of daily living. Yes, you may have some limitations, but you will not have to rely on others to complete basic tasks.
In this post, we will provide some food for thought with regard to the expectation of total independence for the rest of your life.
Social Security Longevity Calculator
The Social Security Administration has a life expectancy calculator on its website. If you plug in the information for someone that is celebrating their 60th birthday this summer, the life expectancy is 83 years for a man. For a woman, it is 86 years.
It may be difficult to wrap your head around the idea of living assistance when you are in your 60s. However, life as an octogenarian can be an entirely different experience.
Over 30 percent of people that are 85 years of age and older have Alzheimer’s disease, and a significant percentage of Alzheimer’s sufferers require nursing home care. There are other causes of dementia as well, and people require nursing home care for other reasons.
Medicare and Long-Term Care Costs
According to the United States Department of Health and Human Services, over half of seniors will need some type of paid long-term care, and 35 percent will reside in nursing homes.
With regard to length of stay, 48 percent of seniors that need paid long-term care receive the assistance for less than one year, and 19 percent are in the one-to-two-year range.
Twenty-one percent receive care for two-to-five years, and 13 percent require professional living assistance for a minimum of five years.
The median annual charge for a private room in a North Aurora area nursing home was $102,383 in 2020, and it was just over $60,000 for a home health aide.
Medicare does not cover the custodial care that you would receive in a nursing home, and it does not pay for in-home care, so this is not the solution.
Medicaid does cover long-term care, and in fact, most elders in nursing homes are Medicaid beneficiaries. Medicaid is only available to people with sparse monetary resources, so you cannot qualify if you have more than $2000 in assets in your name.
Personal belongings and items that you have around the house are not counted, and you can have one motor vehicle. Heirloom jewelry, wedding rings, and engagement rings are not countable assets, and you can have unlimited term life insurance and $1500 of whole life insurance.
Your home is not a countable asset for Medicaid eligibility purposes, and there is no equity limit if a healthy spouse is remaining in the home. If there is no independent spouse, the equity limit is $603,000 this year.
You can potentially gain eligibility as a homeowner, but this is something that you want to avoid. There is a Medicaid estate recovery mandate, so the program will seek reimbursement from your estate if you are a Medicaid beneficiary.
If your home is in your direct personal possession at the time of your passing, they could place a lien on the property. Once again, this would not happen if a healthy spouse is residing in the home, and there is an exception for minors and blind or disabled adult children.
Irrevocable Medicaid Trust
A Medicaid plan can revolve around the utilization of an irrevocable Medicaid trust.
You could convey your home, income-producing assets, and other property into the trust. While you are living independently, you could receive distributions of the income, but you would not have access to the principal.
The assets in the trust would not count if you apply for Medicaid, but you have to act in advance because of the five-year look back period. You are penalized and your eligibility is delayed if you violate this look back rule.
We Are Here to Help!
If you are ready to work with a North Aurora, Illinois elder law attorney to develop a nursing home asset protection plan, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 630-568-8611.