It’s just as important as ever to protect against nursing home costs, by planning ahead or getting advice at the right time. In these crazy days of quarantine and pandemic, most of us are focused on just surviving and staying healthy day-to-day. Planning ahead sometimes take a backseat to simply meeting today’s challenges.
Just this week in my office, we finally got Medicaid to finish a couple of slow-moving cases that had dragged on for many months. In each case, we were able to shelter assets even though they were in a nursing home when they applied for Medicaid – because they received my counsel and took action at the right time. Without our successful and timely intervention, they instead would have lost everything.
Nursing homes play a critical role in our health care system. Many individuals, whether due to a fall, illness or discharge from a hospital, still require the rehabilitation, healing and long-term care provided by a nursing home.
Nursing homes are catastrophically expensive. The statistical statewide average cost of nursing home care last fiscal year was more than $350 a day, $10,700 per month, or more than $125,000 per year! It always surprises me how many people assume that nursing home care will be paid for by their regular health insurance coverage that pays for all their other medical expenses – but it’s not. There are only so many ways for your nursing home care to be paid for, and one of them is very bad – when you’re paying the home directly in a “self-pay,” “private pay,” or “spend down” mode.
If you need long term care but do nothing, you can be financially wiped out. Even worse, when nursing homes don’t get paid in full, they can legally sue adult children. That is an especially ugly situation.
To protect yourself and your hard-earned assets you need to act at the right time – before you need nursing home care, or as soon as you know that nursing care admission may be needed. Waiting to implement the right strategy can cost you that $10,000 per month or more, till you get your planning in place.
I’ve had many clients come to me too late, months after they or their spouse first needed nursing home care. It was too late to take steps that could have taken earlier, and it cost them tens of thousands of dollars. With the right kind of advice and tactics they could have saved lots of money, and so can you.
However, you may need to act at the right time. For example, to use an “Asset Protection Trust” Strategy, you need to act sooner instead of later. The Asset Protection Trust strategy is also a better fit for someone who has more rather than less money to start with; who is still relatively healthy with minimal possibility of the need for nursing home admission on the horizon; or whose care can be paid for by means other than spending down savings, such as by long-term care insurance.
More often, just before someone is heading to the nursing home is when you need to take steps – but it’s never too early to learn and be prepared, or too late to try.
For a married couple, when one spouse is going into nursing home care and the other is staying at home, they can save almost everything they own. Without the right planning, the “community spouse” – the spouse still living at home, not going into the nursing home – may be limited in the assets that can be kept and end up impoverished. If they lack proper guidance, all the rest of their money may need to be “spent down” to pay for the nursing home spouse.
For a single, unmarried person, we can virtually always save a significant chunk of their assets – often about half, plus or minus – that would otherwise be spent down and gone.
You should always act sooner instead of later to inform yourself with information necessary to protect yourself, your parents or others.
There can be tricky cases that make us work harder for a good result, for example especially when both spouses are going into expensive long-term care at the same time, or when the costs of liquidating illiquid assets like real estate, or tax burdened assets like IRAs, make it difficult or expensive to engage in necessary strategic transactions. Counseling couples in second or subsequent marriages when there are kids from prior marriages presents a special challenge.
The bottom line is to get help and take action to protect against the cost of nursing home care sooner rather than later. Never wait till it’s too late, to protect as much as you can.
