When you think about the factors that impact your estate plan you likely focus on factors related to the division of your estate assets. While the distribution of your estate assets may indeed be at the core of your estate plan, you will not have any assets left to distribute if you do not protect them throughout the course of your lifetime. One issue that can have a direct and powerful impact on your assets is the cost of nursing home care. In fact, if you fail to plan for the impact nursing home costs may have on your estate plan it could derail your entire plan.
Why Are Nursing Home Costs So Important?
Like many people, you may think of the possibility that you will need long-term care to be a remote possibility – and not something you need to concern yourself with until the time comes. The reality, however, is that the longer you live the better the odds are that you will need long-term care (LTC) at some point before you die. When you reach retirement age, your odds are more than 50% that you will one day need LTC. If you make it to age 85, those odds increase to a 75 percent chance you will eventually be in LTC. As you can see, the odds actually favor your need for LTC.
As for waiting until the need arises to concern yourself with the costs of LTC, that could be the biggest financial mistake you ever make for several reasons. Understanding the relationship between nursing home costs and your overall financial picture will help you understand why it is crucial that you plan ahead for the possibility you will need to pay for LTC.
How Much Does a Nursing Home Cost?
Most people are surprised to learn just how expensive nursing home care can be. In the State of North Dakota, the average yearly cost of LTC is at $130,000 per year, or almost $11,000 per month. Moreover, the average length of stay in a nursing home, or other LTC facility, is 2.5 years. That means that the average nursing home costs for someone in North Dakota is $325,000. Can you afford to cover that out of pocket when the time comes? If you are like most people, the answer is “no.” Do not count on Medicare to help either as the Medicare program only covers nursing home expenses under very specific circumstances and even then, only for a very short period of time. Your basic health insurance policy is unlikely to help either as most do not cover LTC expenses unless you purchased a separate LTC rider at an additional cost. For most people, Medicaid is their only hope for help covering LTC costs.
How Do Nursing Home Costs Impact My Estate Plan Though?
Knowing how expensive nursing home care is, however, does not completely explain why or how those costs will impact your estate plan. The answer can be found in the need to qualify for Medicaid to help cover those high costs. Over half of all seniors end up turning to Medicaid for help paying their LTC bill. In order to qualify for Medicaid, however, the value of your assets cannot be above the program limit, usually set at just $2,000 for an individual. If your assets do exceed the program limit, you will be expected to “spend-down” your assets until they fall below the limit at which point Medicaid will help cover your nursing home expenses. In essence, this means you will have to deplete your life savings before Medicaid will help – unless you planned ahead by including Medicaid planning in your estate plan. Medicaid planning uses legal strategies and tools to help protect your hard-earned assets while also setting you up to qualify for Medicaid should the time come that you need help covering LTC expenses.
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how nursing home costs impact your estate plan, contact the experienced North Dakota and Minnesota estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.
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