Elder law is another aspect of estate planning, focusing primarily on the needs of families and individuals as they age. Issues of aging include senior housing and home care, long-term (or nursing home) care, guardianships and health care documents, Medicare and Medicaid.
As our population ages, more and more of us confront elder law-related issues, whether for ourselves or our parents. One of the most pressing issues is long-term nursing home care, which usually is not covered by traditional health insurance. Depending on where you live and the level of care needed, nursing home care can cost from $35,000 to $150,000 a year. The average stay is slightly more than three years. Most people end up paying for nursing home care until their personal (or family) assets are depleted, then they may qualify for Medicaid to pick up the cost.
Careful planning, however, can help protect your assets, whether for your spouse or for your children. The belt-and-suspenders approach is to purchase long-term care insurance while you are healthy enough to qualify, and to make sure you receive the benefits to which you are entitled under Medicare and Medicaid.
Clients are frequently confused over the differences between Medicare and Medicaid. Though their names are very similar, the programs are quite different. Medicare is an entitlement program, a federal health insurance program in which most people enroll when they turn 65 years old. There are no financial qualification rules. Medicare has two primary parts: Part A and Part B.
Medicare Part A covers in-hospital care, extended care after a hospital stay, some home health care services, and hospice services. The rules for nursing home coverage are very strict and, in fact, Medicare pays for less than 9 percent of nursing home care in this country.
Medicaid, is a joint federal-state program, subject to certain federal requirements, each state implements its own regulations on how the program is managed. Medicaid is not an entitlement program like Medicare, but rather a form of welfare. Medicaid eligibility is determined after the proper application is submitted to the commonwealth. There are many Medicaid insurance programs available in Virginia, from basic medical coverage to nursing home programs. Information about Medicaid for long-term care in a nursing home or community setting, can be found on the Virginia Department of Medical Assistance Services website.
The Virginia Department for the Aging provides a wealth of information for seniors and care givers.
We assist seniors and their families in making the tough decisions regarding long-term care planning, including whether Medicaid eligibility may be an option.
Assets in a revocable living trust are not protected from Medicaid liens and attachments and must be used to pay for the costs of long-term care.
If you are married, your home is exempt for Medicaid eligibility and Medicaid cannot require its sale to pay for the cost of care unless your equity in the home exceeds $500,000. However, if you are single and must move to a nursing home then before you are able to qualify for Medicaid your home must be sold and the proceeds of the sale must be used to pay for the medical bills before you are eligible for Medicaid benefits. If you transfer your home to your children with a simple deed of gift, not only will it result in immediate ineligibility for Medicaid, but it could also:
Obviously, giving your assets away means losing control and it can be a divisive to the family dynamic. What if your children were to subsequently divorce their spouse after you’d made them a gift you hoped they return if you needed it back? Or a child goes bankrupt or another is sued. The result in any of these situations is probably not what you planned. All of the money transferred at grave risk. There are asset protection trusts that allow you to determine how 100% of your assets are spent without exposing them to the need to be ‘spend-down’ for your long-term care needs.
Nor must you necessarily wait 60 months to qualify for Medicaid. Eligibility is calculated on a case-by-case basis. It is possible to have assets and still qualify immediately. Get professional advice and learn the facts. It is never too late to protect your assets even if you are already in a nursing home. However, applying for Medicaid prior to qualification could result in being disqualified for a longer period of time than you otherwise would have been (it's not limited to 60 months.)
Beware, the nursing home or hospital that offers to file a Medicaid application for you as they have no obligation (and often can't) advise you on how to protect your assets. Make sure that any law firm you engage to assist you with your Medicaid planning has experience in myriad issues that govern this bureaucracy; it is preferable to seek the advice of a firm that has dedicated it practice to Elder Law issues. After all, would you ask your family doctor to perform complicated brain surgery?
Always consider your option to purchase long-term care insurance. Often, an annual premium for a couple is less than the cost of one month in a nursing home and certainly less than 24 hour care in your own home. In fact, with proper planning, long term care insurance may be the only way you can afford to remain in your home if you were to need daily nursing care.
Helping a parent move to senior housing can seem more intimidating than orchestrating a rocket launch. The death of a spouse, declining health or safety concerns can trigger the need to move. The first phase comes with the realization that what has been home is no longer suitable. Emotional ties to a place are hard to overcome. Finding a new home that is appealing and appropriate is no easy task, and neither is culling through a lifetime’s accumulation of “stuff.”
Here are some tips to help make the transition easier: