Medicare will help to pay for a wide range of different health care treatments, procedures, and services, including convalescent care after an injury or illness. However, it will not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living community. There are also health aides that provide mobile custodial care in the homes of patients, and Medicare does not cover their fees.
If you are under the impression that there is a good chance that you will never need long-term care of any kind, we have some bad news to pass along. The vast majority of senior citizens will someday need help with their activities of daily living. Many of them will spend their final days in nursing homes; the exact figure is 35% according to the U.S. Department of Health and Human Services.
These facilities are extremely expensive around the country, and in some part of the Los Angeles area where we are located, the costs are higher than the national averages. According to the state, the average charge for a year a nursing home in California as a whole is right around $110,000. Some people require multiple years of care, and if you are married, there can be two separate rounds of nursing home costs that must be addressed.
Without question, the numbers can get quite large, and these are the figures that are in place at the time of this writing. Costs are rising year-by-year, and Genworth Financial has placed an estimate of the trajectory we will see going forward. They are predicting a 4% per year increase in nursing home costs during each of the next five years.
As you can see, if you need nursing home care in a couple of decades, the rates will be much higher than they are right now.
Nursing Home Asset Protection
All the above sounds like a lot of gloom and doom, and admittedly, it is not a very pleasant prospect on a personal level or a financial level. However, when you reach an advanced age, you may face certain eventualities that are just part of life. On the financial front, there is a widely embraced solution that can help you preserve your legacy for the benefit of your loved ones.
Medi-Cal will pay for a stay in a nursing home, and in fact, most people in California nursing homes are enrolled in the program. According to the American Association of Retired People, the figure is 65%. Most individuals are aware of the fact that this program is only available to applicants with limited financial need, but many people in nursing homes were never abjectly poor.
To qualify for Medi-Cal to pay for long-term care, people often give away assets to their loved ones before they apply. An insider would call this a “spend down,” but it is somewhat complicated to accomplish this goal. There is a 30-month look back period, so you have to complete your gift giving at least 30 months before you apply in order to receive immediate eligibility.
Medi-Cal and the Rights of the Healthy Spouse
While we are on the subject, we will provide some additional details. If you are married and you are applying for Medi-Cal while your spouse is still capable of independent living, the healthy spouse would have certain property rights.
The family home is not a countable asset, and there is no equity limit. A limit is applied in other states, and California is expected to follow suit at some point in the future.
A healthy spouse is also entitled to a Community Spouse Resource Allowance. This is equal to half of the shared countable assets, but there is a limit. It stand at $126,420 this year.
Under ordinary circumstances, almost all of the income that is earned by the spouse that is in a long-term care facility would be absorbed by Medi-Cal to defray the costs.
However, if the community spouse relies on all or some of this income to maintain a minimum standard of living, he or she would receive a Monthly Maintenance Needs Allowance. The maximum allowance in the Golden State in 2019 is $3161.
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