Most people believe Medicare will cover all of your medical expenses when you are a senior citizen. They know that there are some out-of-pocket expenses, but the lion’s share of everything will be paid for by Medicare when you become eligible.
This is true for the most part, but there is a major caveat when it comes to nursing home care, and we will share the details here.
Custodial Care
Nursing homes assist people that need a significant level of help with their activities of daily living. This is considered to be custodial care, and this type of care is not covered under the Medicare guidelines. There are in-home health aides that provide custodial care as well, and this is another service that is not covered by Medicare.
Hartford, Connecticut Nursing Home Costs
As you might imagine, nursing homes are very expensive, and in Connecticut, the costs are higher than the national average. Genworth Financial has been keeping track of the state of long-term care costs for several years.
According to their 2021 findings, the median cost for a private room in a Hartford area nursing home was $179,398. They also provide future projections and have determined that the median cost in 2031 will be just over $241,000.
One year is the average length of stay, but just over 50% of people that receive paid assistance need care for more than a year. A married couple could potentially be pounded with two different sets of nursing home bills, so the overall costs can be staggering.
Long-Term Care Insurance
Long-term care insurance is available, but there are some major drawbacks. For one, there is an elimination period. If you file a legitimate claim, you have to pay out-of-pocket for a certain length of time that is stated in the policy. It will typically be somewhere between 30 days and 90 days.
Plus, the premiums are quite high if you obtain the coverage when you are older. And even though a slight majority of people require long-term care, many do not, so you could put out all this money for nothing.
Medicaid Planning
All things considered, the logical course of action is the implementation of a Medicaid eligibility plan. This program will pay for long-term care if you can gain eligibility, but there is a low $1,600 asset limit in Connecticut.
To develop the necessary financial profile, you could establish an irrevocable Medicaid trust. When you fund the trust, those assets would not count if you apply for Medicaid as long as you do so at least five years after you convey the assets to the trust. In the meantime, you can accept distributions of earnings that are generated by the trust’s assets.
Plus, Medicaid is required to seek reimbursement from the estates of deceased beneficiaries. You can qualify as a homeowner because the value of the home would not be counted at the time of your application submission. However, it would be in play during the Medicaid estate recovery phase.
For this reason, you can make the trust the owner of your home as well. This will protect the property from Medicaid estate recovery, but you can live in the home as usual until and unless you enter a nursing home.
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Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.