You may assume that Medicare will make all of your healthcare needs affordable after you reach the age of 65. This is medical insurance for senior citizens, and these are the folks that populate nursing facilities.
When you put two and two together, you would expect Medicare to cover long-term care. In fact, Medicare will not address custodial care costs at all, so you are on your own.
Connecticut Nursing Home Costs
These are some hefty bills if you are in a long-term care facility for any length of time. The state of Connecticut has determined that the average cost for a month in a nursing home in our state is $14,060, which is over $168,000 a year.
That’s a lot of money to come up with late in your life, and 12 months is the average length of stay. However, just over half of people that require long-term care receive assistance for more than a year, and 13 percent incur the costs for more than five years.
Medicaid Eligibility
If you work hard and pay your taxes to qualify for Medicare, you are not covered, but Medicaid will pay for long-term care. As a result, Medicaid eligibility is the key to a successful nursing home asset protection strategy.
There is a $1,600 asset limit in Connecticut, but you can divest yourself of assets to develop the right financial profile. This would be simple if you could give your children their inheritances in advance after you find out that it is time for you to move into a nursing home.
The five-year Medicaid look-back period is in place to prevent these reactive divestitures. If you transfer assets out of your name today, you will be ineligible for a period of five years.
Home Ownership and Medicaid Estate Recovery
You can qualify for Medicaid as a homeowner because your home is not counted at first, but in a way, it is serving as collateral. After you die, Medicaid would place a lien on the home unless it is protected for some reason.
If your surviving spouse or a minor or dependent adult child is living in the home, Medicaid would not attach the property. There is also a child caregiver exemption, so you can give your home to a child that has been providing care for you for at least two years.
The recovery mandate is devastating a lot of low-income families that were not aware of its existence. Sometimes people are aware of it, but they never take any action to protect their homes because they do not know if they will require long-term care.
The Western Center on Law & Poverty, California Advocates for Nursing Home Reform, Justice in Aging, and two other advocacy groups have called on Congress to repeal the estate recovery mandate.
They point out the fact that it is damaging many vulnerable families, and they make another compelling point. If you total all of the money that is recovered, it is equal to .55 percent of Medicaid fee-for-service spending.
The mandate does a lot of harm, and it is really not doing any good, so the advocates make a strong argument.
Medicaid Trust
You can be proactive about the implementation of a plan to protect your home and your other assets from Medicaid estate recovery. If you convey your property into an irrevocable trust, you could accept distributions of the trust’s earnings, but you would lose access to the principal.
A lot of people rely on the income that is generated by invested assets, so they would not be spending the money anyway. As long as you fund the trust at least five years before you apply, the assets in the trust would not count, and the home would be protected from recovery efforts.
Schedule a Consultation Right Now!
If you take action in advance, you can go forward with the knowledge that you can gain eligibility for Medicaid to preserve your legacy without losing anything in the process.
An attorney from our firm can help you develop a plan that ideally suits your needs. You can schedule a consultation at our Glastonbury or Westport, CT elder care planning offices if you call us at 860-548-1000.
There is also a contact form on this site you can fill out if you would rather send us a message.
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.