The population of the United States is getting older, because the baby boomer generation is attaining senior citizen status. There are many people asking questions about legal and financial matters that seniors will be facing over the coming years. As elder law attorneys, we provide answers to our neighbors throughout the greater Austin area.
Without question, there is one elder law issue that stands above all the rest at the present time. According to the United States Department of Health and Human Services, seven out of every 10 people who are turning 65 on any given day will eventually need help with their activities of daily living. This is an eye-catching statistic to say the least, and many of these individuals will reside in nursing homes toward the end of their lives.
It can seem as though nursing home care would be covered under Medicare, because after all, it is a health-related expense. Whether it makes sense or not, the Medicare program will not pay for a stay in a nursing home, because the type of care that is received is considered to be custodial care. Medicare will pay for convalescent care after an injury or surgery, but it won’t pay for the custodial care you would receive in a nursing home.
As we have stated, 70 percent of seniors will someday need living assistance, but in many cases, they will be able to get help from family members and friends for quite a while. However, to understand the situation fully, you have to see the entire picture.
According to the United States Census Bureau, the very oldest segment of the population is growing faster than any other. Once you reach the age of 68, it is likely that you will live into your mid-80s. Alzheimer’s disease strikes about 40 percent of people that are 85 years of age and older. Clearly, many Alzheimer’s sufferers require nursing home care. When you combine this with other underlying causes, you can see that you may well reside in a nursing home during the latter portion of your life.
If you have to reach into your savings to pay for nursing home care, the consequences can be devastating. Here in the greater Austin area, you can expect to pay somewhere in the vicinity of $80,000 a year for a private room in a nursing home at minimum, and costs have been on the rise. The numbers could well be much larger if you need nursing home care 10 or 20 years from now.
Fortunately, there is a solution to the huge hole in Medicare coverage as it applies to nursing home expenses. Medicaid does pay for custodial care, but of course, it is intended for people with very limited resources. As a result, there is an asset limit of $2000, and there is also a modest income limit.
The good news is that there are a number of different exemptions when it comes to property that is counted. Your home is not a countable asset, and there is no equity limit if your spouse will be remaining in the home after you enter a long-term care facility. However, it should be noted that Medicaid can seek reimbursement if you directly own property at the time of your passing. So, your home would be in play during probate unless you take steps to protect it in advance.
One vehicle that is used as a primary source of transportation does not count, and you can maintain ownership of your wedding ring, your engagement ring, and your heirloom jewelry. Personal effects, household items, and term life insurance and burial plots are excluded as well.
A healthy spouse is entitled to certain protections when their spouse is applying for Medicaid. There is a Community Spouse Resource Allowance that allows the healthy spouse to maintain ownership of half of the shared countable assets up to a certain limit. The healthy spouse can also continue to receive income that is payable to the spouse that will be entering the nursing home if the income is relied upon.
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When it comes to the assets that are countable, if you act in advance, you can implement a Medicaid “spend down” strategy. Precise planning is key, because you have to complete all divestitures at least five years before you submit your application.
Our doors are open if you would like to discuss this or any other elder law matter with one of our attorneys. You can set up a consultation right now if you give us a call at 512-478-3800.