Are you happy with your current Long-Term Care plan? Do you even have a plan in case you need to enter a care home in the future? Did you know that Skilled nursing homes have been known to charge $8,000, $10,000, $15,000 per month, or more? Some may have these kinds of funds available. If that is you, then you probably don’t need to read the balance of this article. However, if you feel that coming up with $8,000 to $15,000 per month would be difficult or impossible, or if you think that to do so would require you to sell your house or spend your estate until you become poor before you could get help to pay for this, then this Article should be of interest to you, because now is the time to think about whether you are in the right plan or whether a new plan could save you money or assets in the end.
There are basically 3 options on how to take care of Long Term Care costs. Each have benefits, and detriments and I will try briefly explain each option.
Option 1: SELF PAY. This is the simplest of the 3 options, and basically presupposes that you have enough money set aside to pay the normal $96,000 to $180,000 per year expense to be in or have a loved one in a Skilled Nursing Facility.
Option 2: LONG TERM CARE INSURANCE. This is a wonderful way to pay the Nursing Home Fees for pennies on the dollar. Many Long-Term Care Insurance Policies allow for In-Home-Care which is always nice and convenient. In addition, many policies, once you go into a care home, you no longer have to pay the premiums, and in some cases, the amount the insurance will pay may have a cost of living increase each year. Unfortunately, some policies usually older policies have a set amount they will pay per month, or for the term of the insurance which is often not enough to take care of the need when it comes up. Or there are those times when the premiums get to be so expensive it is prohibitive or impossible to pay, and you lose the policy and all the money you put into it during your life.
I would suggest that if you have a long-term policy and see how it works and see whether it will be sufficient to take care of your needs when they come up. If your policy only pays $100 per day (about $3,000 per month), you will be short $5,000 when the need arises. If your policy will only pay enough to cover 2 or 3 years of care and you are in the home for 5 or 10 years, then your funds will fall short and could lose everything. If premiums go up as some of my client’s premiums did, 70% or 84% in a year, then you may have to look at shortening the term the insurance will pay or look at a different option.
Option 3: BENEFITS FROM THE DEPARTMENT OF HEALTH CARE SERVICES. Most of us cannot afford the $100,000 price tag for a Skilled Nursing Home. And as we get older, it gets to the point where we cannot afford Long Term Care Insurance or cannot qualify for it. In these cases, we need to ask for some help from Medi-Cal or Medicaid. Most of us have been paying taxes for most of our lives to be able to POSSIBLY qualify to receive benefits from Medi-Cal (if you are in California), or Medicaid if you are from other states. This is a federally funded program, administered by each state through its counties. Although it is a program often administered with the states indigent programs, it is actually a long-term care program.
In order to obtain these benefits, you will need to qualify under the State rules, which differ from State to State. The state (Department of Health Care Services in the State of California) will generally look at what type of assets you have, dividing them into 3 general categories: Exempt, Available and Unavailable. These categories will be discussed in a future article. Once your assets qualify you for benefits, then the State will look at your income to determine what your share of cost will be (how much of the bill they will pay and how much you will pay).
No matter which option or plan you have, you should insure that your estate planning documents, your Trust, your Powers of Attorney and Advanced Healthcare Directives should have wording terms and authorities built within them that allow you to qualify for State benefits without losing your home or having to spend down your estate. Most estate documents, even those created by Attorneys, do not have these types of authorities. Here at Beyer, Pongratz, & Rosen, a Professional Law Corporation, since the year 2009 have put these types of authorities into our documents. If you would like a free consultation to review your documents to insure such terms are present, contact us at Beyer, Pongratz & Rosen, a Professional Law Corporation, and bring the peace back into your life.