Articles by  Alice Reiter Feld

NURSING HOME & MEDICAID PLANNING AND LONG-TERM HEALTHCARE

Most people are not aware that Medicare and private Medicare supplemental insurance do not cover the cost of long-term care. For the average individual or married couple who have worked hard all their married life, nursing home costs and costs of long-term care can wipe out their entire life savings in months.

Under very limited circumstances Medicare will cover 100% of the first 20 days and part of the next 80 days (supplement insurance may make up the difference). After 100 days, Medicare won't pay anything and usually neither will a private supplement policy. In reality, Medicare will cover no more than a few weeks.

Of people reaching 65, over 40% will spend time in a nursing home. The average cost is $4,500 per month and steadily rising.

For those facing a potential long-term care crisis, there are three options:

Option number 1 is no problem if you are a millionaire! Option number 2 is becoming increasingly more popular. Although the premiums are expensive and the policies are confusing, we are strongly recommending that all our clients who are eligible purchase some long-term care insurance. Firstly, Medicaid will not pay for in-home care, only nursing home care (with limited assisted living coverage). Secondly, qualifying for Medicaid can be complicated and stressful.

If you purchase long-term healthcare insurance, make sure you use a reputable company and buy at least 3 years of in-home and nursing home coverage at a minimum of $120 per day with a cost of living rider. For a complete checklist of long-term insurance criteria or if you would like our office to assist you in this regard, please feel free to contact us.

Option number 3 is a viable avenue for many of my clients. There are certain assets that are exempt from consideration and can be kept when applying for Medicaid. These include

• Your personal residence

• One automobile

• Whole life insurance with cash surrender value of less than $2,500

• Prepaid funeral plan

• Household furnishings

• $2,000 for a single person 

• $84,120 for a married person

Other assets such as cash, bonds, savings, stocks, etc. may need to be used up before becoming eligible. IF THESE COUNTABLE ASSETS EXCEED THE ABOVE LIMITS ARE YOU STUCK WITH SPENDING DOWN ALL OF YOUR ASSETS? THE ANSWER IS NO IF YOU ARE AWARE OF STRATEGIES AND HOW TO USE THEM WITH THE HELP OF A QUALIFIED MEDICAID PROFESSIONAL. With proper preplanning and expert legal advice, all or some of these assets can be preserved and transferred.

Many clients are under the mistaken belief that a Revocable Living Trust will provide Medicaid eligibility. While the Revocable living trust is a basic and valuable estate-planning device essential to most Medicaid preplanning, the assets in the trust are still considered belonging to you for Medicaid purposes. However, the Living Trust package including a Durable Power of Attorney should be the first step when doing Medicaid preplanning as well as estate planning in general.

Preplanning is very important in order to maximize the possibility of saving all of the family's assets. Once illness strikes the options become fewer, but it's never too late as long as there are still assets to preserve. If you have any questions about this very important area of the law, please do not hesitate to contact us.