While we can’t stop the aging process, with proper planning we can make it an easier transition for you and your loved-ones in case you ever need long term care.
According to the U.S. Department of Health and Services, almost 10 million people needed some form of long-term care in the United States in 2010. Of this population, 3.6 million (37%) were under age 65 and 6 million (63%) were over age 65. Almost 70% of people turning age 65 will need long-term care at some point in their lives.
Many people think the phrase long-term care refers to an insurance policy. While insurance may be part of your strategy, long-term care encompasses everything from long-term services and support and finances, to where you will live and how you will navigate the myriad of legal, family, and social dynamics along the way.
The cost for long-term care depends on the type of care, the provider used and where you live. In Colorado, a private room in a nursing home costs approximately $87,000 a year. It is no wonder that the number one reason why seniors go broke is because they need long-term care.
How to Pay
1. LONG-TERM CARE INSURANCE
Unlike traditional health insurance, long-term care insurance is deigned to cover long-term services and supports, including personal and custodial care in a variety of settings such as your home or a facility.
The problem with long-term care insurance is that if you are in poor health or already receiving long-term care services, you likely will not qualify as most individual policies require medical underwriting.
2. PRIVATE PAY
Fact is that many Americans underestimate the cost for care. , and may not have sufficient funds to cover the increasing cost. As a result, many seniors go broke because they did not purchase long-term care insurance and did not do any type of planning .
Medicare pays for healthcare for people age 65 or older. Medicare is not designed to pay for long-term care unless you meet certain conditions. And even if you do meet those conditions, Medicare will only pay for some of the costs the first 100 days. The first 20 days Medicare pays up to 100%, for days 21-100 there is a $140 co-pay per day. As a result, seniors should not rely on Medicare to pay for long-term care that requires assistance for more than 100 days.
Medicaid is a joint federal and state program. Although every state administers the program differently, certain rules are federal. There are ways to protect some of your hard-earned money. One of those ways is an irrevocable trust. If properly structured and assets transferred into the trust at least 5 years earlier, such assets are protected from a spend down. Please make sure to work with an experienced elder law attorney on creating and funding an irrevocable trust.
5. VA Benefits
The Department of Veterans Affairs (“VA”) provides a valuable benefit. Unfortunately, the benefit is not well known or understood. Many veterans and their families do not even know it exists. The benefit is called the VA Pension, and is also referred to as Aid and Attendance. If eligible, the veteran could receive up to $2120 a month (in 2015) to help pay for long-term care. Similarly to Medicaid, the VA also has an income and asset limit, and it is best to work with an Elder Law attorney to understand the details and how to plan for the benefit.
Why Work With An Attorney?
The Medicaid and VA Pension Rules and Regulations are highly complex. An experienced Elder Law Attorney will be able to help navigate these complexities. Additionally, this type of planning can have major tax implications or might cause penalties. The Attorney can also represent you and your loved-one in case of a Medicaid or VA Hearing or Appeal.
For more information about long-term care or estate planning, schedule a free initial consultation by calling (719) 694-3000.