When you are planning for retirement, you probably envision the good times that you will have when it is time to enjoy the fruits of your labor. You can enjoy leisure activities, travel, spend time with family members and friends, and bask in your newly found freedom.
These golden years can be rewarding, but it is important to consider the twilight period that will inevitably follow. Many people do not consider a looming threat that could potentially consume a lot of the legacy that you would like to pass along to your loved ones.
The United States Department of Health and Human Services maintains a very informative website called LongTermCare.gov. According to the site, seven out of every 10 seniors will someday need living assistance. About 35 percent of them will ultimately reside in nursing homes.
If this sounds like an unusually high number, you have to understand the longevity statistics. Once you reach the age of full Social Security eligibility, your life expectancy is 85 years if you are a man, and 87 years if you are a woman. Life as an octogenarian is hard to envision, but many of us have this experience.
Medicare and Nursing Home Costs
Nursing homes are very expensive all around the country, and the prices here in the Los Angeles area are higher than the national averages. Clearly, there are a lot of different communities and the prices vary, but you are definitely looking at a rate that will reach the six-figure mark.
The average length of stay is one year, and married couples have to consider the possibility of two different sets of bills. You may assume that Medicare would pick up the tab since it is intended for senior citizens and most elders will need some type of care.
Many people would say that it is unfair and it makes no sense, but unfortunately, Medicare does not pay for living assistance. It will pay for convalescent care, but it does not cover the custodial care that nursing homes provide.
Fortunately, there is a widely embraced solution in the form of Medi-Cal. This jointly administered federal/state government health insurance program will pay for living assistance if you can qualify.
Since it is intended for people with limited resources, you cannot gain eligibility if you have more than $2000 in countable assets. That can seem like a dealbreaker, but some things that you may own do not count, including your home and your motor vehicle.
Your first thought may be that you can give assets to your loved ones if you find out that you have to move into a nursing home. This make sense, and a lot of people do give gifts to family members. In a real sense, you would simply be giving them their inheritances in advance.
The government does not want people to be able to “play the system” in this manner, so they have implemented a look back period. In other states, the look back period is five years, but it is 30 months in California.
If you give gifts within 30 months of the day that you submit your application for Medi-Cal coverage, it will be denied. You could potentially become eligible in the future, but there would be a delay.
To use a simple example, if you gave away enough to pay for 18 months of nursing home care, your eligibility would be delayed by 18 months.
Schedule a Medi-Cal Planning Consultation Today!
Because of this look back period, it takes careful advance planning to position your assets with future Medi-Cal eligibility in mind. While it is possible to give direct gifts, you could choose to establish and fund a Medi-Cal trust.
We can explain the details if you would like to put a plan in place. You can schedule a remote consultation right now if you call us at 310-337-7696. If you would rather reach out electronically, you can send us a message and we will provide you with a quick response.