Nobody likes thinking about the possibility that they will no longer be able to handle basic activities of daily living such as bathing, dressing, toileting, and transferring. But while it may be upsetting to think about, planning for potential long-term care needs is one of the most important actions you can take to protect your loved ones from financial strain and hardship.
Considering a home health aide typically costs $22-$26 per hour, and care in a skilled nursing facility in our area typically costs $13,000-$15,000 per month, the lack of planning can rapidly deplete savings, bankrupt a surviving spouse, or add enormous financial burdens on other family members. Many people are surprised to learn that, aside from limited circumstances, Medicare does not pay for long-term care. Instead, Medicaid is the government program available to assist qualified individuals in paying for long-term care.
Unlike Medicare, Medicaid is a means-tested program. This means one must qualify financially to receive Medicaid benefits. For those who qualify, Medicaid can be used to pay for home health aides (Community Medicaid) or for care in a skilled nursing facility (Nursing Home Medicaid). Because a single Medicaid applicant can have no more than $15,150 in countable resources (in 2018), planning for Medicaid involves removing assets from your name so that they are no longer counted against you. In many cases, this is done by transferring assets to a properly drafted irrevocable trust.
When property is transferred to an irrevocable trust, that property is not considered by the Medicaid program when later applying for benefits. Not only will an irrevocable trust help in qualifying for Medicaid, the trust can also prevent New York State from asserting claims and liens against the property after Medicaid benefits are granted. Given the strict and complicated Medicaid rules regarding the transfer of property, the best time to protect what you’ve worked so hard for is well before any type of care is needed. Properly planning for long-term care needs can save your family hundreds of thousands of dollars in costs in the future.