If you are still a considerable number of years away from retirement you may not even have considered adding things such as nursing home planning or Medicaid planning to your estate plan – but you should. Although none of us like to think about it, the reality is that a tragic accident or debilitating illness could result in the need for long-term care at any point in our lives. Even assuming you make it well into your “Golden Years” before you need nursing home care, if you failed to plan ahead for the cost of that care you could find yourself facing a financial crisis that may result in putting your hard-earned assets at risk. For this reason alone, everyone should include nursing home planning in their estate plan long before they anticipate the need for long-term care.
You Could Need Nursing Home Care Tomorrow
Like most people, when you think of the need for nursing home care you likely envision being in your 70s, 80s, or beyond. The reality, however, is that one in five people suffer an injury or illness during their working years that results in the need for long-term care. You simply cannot assume that you won’t need nursing home care until much later in your life because you could need it tomorrow.
Do You Know How Much Nursing Home Care Costs?
Because you probably assumed you wouldn’t need long-term care for many years you have also likely never looked into how much that care will cost. Nationwide, the average cost of a year in a long-term care (LTC) facility runs about $80,000 as of 2015. The State of North Carolina is almost right in line with the national average, with an average yearly cost of just under $90,000. The average length of stay in a nursing home, or other LTC facility, is 2.5 years across the country. In North Carolina, therefore, an average nursing home bill would run over $200,000. Are you prepared to pay out that kind of money right now? What about during your retirement years?
No, You Probably Are Not Covered by Insurance
“But I have health insurance that will cover it.” This is a common response when people hear what nursing home care is likely to cost them. The problem is that unless you elected to add a separate long-term care policy (at an additional cost) to your standard health insurance policy you are most likely not covered because basic health insurance policies rarely cover LTC expenses. Medicare won’t help you either because it only covers LTC expenses under very limited circumstances and, even then, only for a brief period of time.
How Can Nursing Home Planning Help?
At this point you undoubtedly want to know what will help you cover nursing home costs if you incur them at any point in the future. Unless you can afford to pay out of pocket, Medicaid is likely your best source of help. Qualifying for Medicaid benefits, however, can be difficult because of the program’s income and asset limits. If the value of your “countable resources” exceeds the program limit –usually $2,000 for an individual—you will incur a waiting period during which you will be responsible for covering your nursing home expenses. In essence, you will be expected to use your assets to pay your LTC bill. Understandably, this doesn’t sound like a good plan right? Transferring those assets right before applying for Medicaid won’t work either because the program looks back five years for asset transfers and effectively discounts them. This is why nursing home planning needs to be part of your comprehensive estate plan now. By planning ahead, you can protect your hard-earned assets while also setting yourself up to qualify for Medicaid if you do ultimately need the program’s assistance at any point down the road.
Do not wait until it is too late to protect your assets. Talk to your North Carolina estate planning attorney about including nursing home planning in your overall estate plan now.
For more information, please join us for one of our upcoming free seminars. If you have additional questions about nursing home planning and/or Medicaid planning in the State of North Carolina contact the experienced estate planning attorneys at The Law Offices of Cheryl David by calling 336-547-9999 to schedule an appointment.