We anticipate the release of the annual Genworth Financial cost of long-term care study, and they have just published the 2021 figures. In this post, we will share the updated numbers and put them in context for you.
Naperville, IL Long-Term Care Costs
Just over 50 percent of seniors will need some form of professional living assistance, and some folks can receive the care they need in their own homes. Last year, the median annual charge for an in-home health aide in our area was $68,640, which is a 13.21 percent increase.
There is a very significant jump upward, and if that trend continues, the costs can be staggering in 15 or 20 years. The median annual charge for a private room in a nursing home was significant higher at $96,725. For a semi-private room, the figure was $83,950.
Just under 20 percent of people that incur long-term care costs need the assistance for between one and two years. Twenty-one percent are in the 2-to-5-year range, and 13 percent of seniors that need paid care receive the assistance for more than five years.
This can add up considerably for one person, and a married couple may be forced to deal with two different sets of nursing home bills.
A lot of people naturally assume that Medicare will cover long-term care since it is health insurance for senior citizens, and most seniors will need living assistance. In fact, Medicare will pay for convalescent care, but it does not extend to long-term custodial care.
What Can You Do?
Medicaid is the widely embraced solution, because it will pay for long-term care. However, it is a need-based program, so you cannot qualify if you have significant assets in your name.
Your home is not a countable asset for Medicaid eligibility purposes, but there is another consideration. Congress has established guidelines via legislative mandate, and Medicaid is required to seek reimbursement from the estates of deceased program beneficiaries.
A home is usually the only asset of real value that could possibly be in the possession of a person that was able to qualify for Medicaid. So yes, you can qualify as a homeowner, but Medicaid could put a lien on the property after your passing.
Medicaid Trust and the Five-Year Look Back Period
There is a comfortable pathway to future Medicaid eligibility if you take the right steps at the right times. You can convey your home and income-producing assets into an irrevocable Medicaid trust.
The trick is, you have to act in advance, because there is a five-year look back period. If you divest yourself of assets today, you will be ineligible for Medicaid for the next five years.
As a result, you should fund the trust at least five years before you think that you can potentially reach the point where you will need paid living assistance. While you are not enrolled in the Medicaid program, you could accept distributions of the trust’s income.
You would not be able to reach the principal, but it would not count if and when you apply for Medicaid. The home would be owned by the trust, so it would not be part of your estate at the time of your passing. This would protect the property during the recovery phase.
Need Help Now?
Our doors are open if you have already decided that you would like to work with a Naperville or North Aurora, IL estate planning lawyer to put a plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 630-568-8611.