When you start to reach your middle-aged years, you may spend a good bit of time helping your parents tend to their activities of daily living. Their needs will probably increase over time, and at some point, the level of care that is required may be beyond your capabilities.
Under these circumstances, nursing home care may be the only logical choice. According to the United States Department of Health and Human Services, 35 percent of elders will eventually reside in nursing facilities.
When you digest this statistic, you can see that this is something that everyone should take seriously.
Medicare Will Not Help
You might think that government health insurance for seniors would pay for nursing home care since so many elders will need it. A lot of people would say that it’s not fair, but in fact, Medicare does not cover the custodial care that nursing homes provide.
It’s not easy to pay for nursing home care out of your own pocket. You are looking at $100,000 a year or so in some parts of the Los Angeles area, and the number can be much higher in others. The average length of stay is 12 months, and both of your parents may eventually reside in nursing homes.
The situation can sound like a lot of gloom and doom, and from an emotional standpoint, there is no candy-coating it. However, there is a financial solution in the form of Medi-Cal coverage.
You are probably aware of the fact that this government health insurance program is intended for people with a high level of financial need. There is an asset limit of just $2000, but some assets are not counted, including your home.
However, Medi-Cal is required to seek reimbursement from the estates of benefit recipients after they pass away. Fortunately, steps can be taken to protect the home if you act in advance.
Elder law attorneys specialize in this area. People that want to qualify for Medi-Cal can divest themselves of assets with future eligibility in mind.
This can be done through direct gift giving, and the utilization of a Medi-Cal trust would be another option. This type of trust would be irrevocable, and the person that establishes the trust (the grantor) would not be able to access the principal.
On the positive side, if there are income producing assets in the trust, the grantor/beneficiary would be able to accept distributions of the earnings.
All of this may sound simple enough, but it is complicated by the 30 month look back period. All gift giving must be completed at least 30 months before the application for Medi-Cal coverage is submitted.
Californians actually get a break when it comes to the look back, because the waiting period is five years in other states.
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