Are You Prepared for Nursing Home Costs?

All of us are hopeful that we will be able to live out our lives in our own home without the need to spend time in a long-term care facility. The odds, however, are not in our favor. In fact, the longer you live, the more likely it is that you, and/or your spouse, will eventually end up in a nursing home. If that does happen, are you prepared for nursing home costs? Most people are not. In fact, most people do not realize exactly how expensive those costs are likely to be. The good news, however, is that by planning ahead and including Medicaid planning in your comprehensive estate plan you can protect your nest egg and ensure that the costs of nursing home care are covered when the time comes.

How Likely Are you to Need Nursing Home Care?

The life expectancy for the average American has almost doubled over the last century. Knowing that you will likely live longer than your parents and grandparents is certainly welcome news; however, it also means you have a greater chance of ending up in a nursing home toward the end of your life because a method for halting the natural aging process has yet to be discovered. When you retire at age 65 you will stand a 50-50 chance of needing long-term care at some point prior to the end of your life. If you are still alive at age 85, those odds increase to 75-25 and the cost of that care could quickly deplete your life savings if you failed to plan ahead.

What Will Nursing Home Care Cost You?

As of 2016, the average cost of a year in a nursing home, nationwide, is about $80,000 and the average length of stay 2.5 years.  In North Dakota, the average cost for a semi-private room is $100,375 as of 2015 and the average cost of a private room is $104,938. Therefore, an “average” stay in a North Dakota long-term care facility will cost you over a quarter of a million dollars — $250,000. If you are married, and your spouse also needs nursing home care, you could end up with a long-term care bill of half a million dollars ($500,000!) Don’t count on insurance to pick up the tab either because most health insurance policies do not cover long-term care costs unless you purchased a separate rider at an additional expense. Medicare is not an option either as the program only covers expenses related to long-term care in very limited circumstances and then only for a short period of time. There is some good news though. Medicaid does cover expenses associated with nursing home care, if you qualify for benefits.

Will You Be Eligible for Medicaid?

Medicaid is a federally funded (primarily) but state administered healthcare program intended to be used by low income individuals and families. That means that you cannot qualify for benefits if your income and/or assets exceed the program limits – and the limits are as low as $2,000 in countable resources. If the value of your assets exceed the limit you will be expected to use those assets to cover your healthcare expenses first before Medicaid will step in and help. As a result, your “nest egg” could be significantly depleted in a matter of months. Transferring those assets in anticipation of applying for Medicaid is not an option either because the program uses a five year “look-back” period that calls for a review of your finances for the five year period prior to your application. Any assets transfers during that time period will likely be discounted and the value of the assets imputed back into your estate, causing your estate to exceed the program limit for countable resources.

How Can Medicaid Help and How Can You Qualify for Benefits?

Medicaid will typically cover nursing home costs for program recipients. They key for seniors is to make sure their income and assets fall below the program limits when they apply and that they do not have any assets transfers during the five year look-back period. This is where Medicaid planning becomes important. Medicaid planning uses legal tools and strategies to protect your assets, often by transferring them to a “Medicaid trust” long before you ever need to be eligible for Medicaid. That way, Medicaid will cover the majority of your nursing home costs without losing all of your hard-earned assets.

Contact Us

For more information, please join us for one of our upcoming free seminars. If you have additional questions about Medicaid planning in the State of North Dakota please contact the experienced estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.