The matter of long-term care is a pressing concern for members of the elder law community. Most senior citizens will need help with their activities of daily living, and more than one third of elders will require nursing home care.
A lot of people are not too concerned because they know that they will qualify for Medicare when they are 65. They assume that Medicare will pay for long-term care since it is a health insurance program for seniors, and most of these folks will need living assistance.
In fact, Medicare will not pay for a stay in a nursing home, and it does not cover care that is provided by a professional in-home health aide.
Costs Are High and Rising
Genworth Financial sells financial products for senior citizens. Since this is their demographic, they keep close tabs on the current state of long-term care costs around the country.
They update their figures on an annual basis, and their numbers for 2020 have been released.
In the Los Angeles area, the median annual charge for a private room in a nursing home was $126,838. This is an eye-opening 15.83 percent increase over the 2019 median.
Their survey found that the median cost for a one-bedroom unit in an assisted living facility in our area was $60,000, and this is an 11.11 percent increase. Home health aides are actually more expensive with a median cost of $66,352 in 2020. This figure was 5.45 percent lower in 2019.
We can’t predict the future, but it is logical to assume that these costs will continue to get higher as the years pass.
What’s the Solution?
Fortunately, there is a solution in the form of the Medi-Cal program, because it will pay for custodial care. Since it is a need-based benefit, there is a $2000 limit on countable assets.
The term “countable” is operative, because some property is exempt, including your home. There are equity limits that apply to Medicaid eligibility in every state outside of California, but there is no equity limit in our state at this time.
We are not going to explain the countable versus non-countable assets in this post, but you can check out this entry if you would like to dig into the details.
You can convey countable assets into an irrevocable trust in an effort to gain eligibility for Medi-Cal to pay for long-term care. Until and unless you apply for Medi-Cal, you could receive income that is generated by assets in the trust, but you would have no access to the principal.
The assets in the trust would not count as long as you fund the trust at least 30 months for you apply for Medi-Cal. Because of this look-back period, advance planning is the key to a successful nursing home asset protection strategy.
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