Elder law attorneys provide legal assistance to people that are concerned about the financial challenges that they may face as senior citizens. Without question, nursing home costs are at the top of this list, and you should understand the facts so you can prepare accordingly.
Medicare Won’t Help
The United States Department of Health and Human Services tells us that 35 percent of senior citizens will reside in nursing homes at some point in time. We are all aware of the fact that Medicare is the source of health insurance for the vast majority of senior citizens in this country.
When you combine these two facts, you would naturally come to the conclusion that Medicare would pay for a stay in a nursing home. Many people would say that it is not fair, but in fact, Medicare is not cover the custodial care that nursing homes provide.
Nursing Home Costs
It is not easy to get out a checkbook and pay for nursing home care out of your own pocket. The average annual cost for nursing home care in our area is over a hundred thousand dollars, and the average length of stay is one year.
A married couple could face two different sets of nursing home bills, so the overall impact can be very significant.
What’s the Solution?
Fortunately, there is a solution that you can implement if you plan ahead. Medi-Cal will pay for a stay in a nursing home, but it is a need-based program, so there is $2000 asset limit.
This is the limit on countable assets, but there are some assets that are not counted. These would include your home, one vehicle, wedding rings, engagement rings, heirloom jewelry, household items, and personal effects.
You can have $1500 set aside for final expenses and the same amount of whole life insurance. Unlimited term life insurance is allowed, and Medi-Cal does not count prepaid burial plots.
Healthy Spouse Allowances
In many cases, there will be a healthy spouse that can still live independently. A person that is in this situation is called the “community spouse” in Medi-Cal parlance.
There is a Community Spouse Resource Allowance that gives the independent spouse the right to keep half of the shared countable assets, but there is a limit. For the rest of 2020, the limit is $128,640.
A Medi-Cal beneficiary is entitled to a $35 a month personal needs allowance, and the rest of their income must be contributed toward the cost of the care that is being received.
This requirement is waived if the healthy spouse s relying on the income to maintain a reasonable standard of living. The 2020 Medi-Cal Monthly Maintenance Needs Allowance is $3216.
Medi-Cal Look Back Period
We touched upon the fact that you can qualify for Medi-Cal to pay for long-term care if you plan ahead, and this is an important factor. You can fund an irrevocable Medi-Cal trust to get assets out of your name so that you can qualify for coverage, but timing is key.
There is a 30-month look back period. You have to fund the trust at least 30 months before you apply for coverage. This may sound like a problematic hurdle, but we get a break here in California, because the look back period is five years in other states.
You would not be able to touch the principal if you establish this type of trust, and you would not be able to act as the trustee. However, you would be able to receive income that is generated by assets in the trust until you apply for Medi-Cal.
Schedule a Consultation Today!
As you can see, a nursing home asset protection plan should be embedded in your broader estate plan. If you are ready to get started, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.