When you hear the term “nursing home asset protection,” it may go in one ear and out the other. First, you may assume that it is unlikely that you will ever need nursing home care. Secondly, in the unlikely event that you require the care, Medicare will pay for it, right?
Let’s take a look at these assumptions.
Aging and Living Assistance
If you expect to be perfectly capable of handling your day-to-day needs when you are in your 60s and early 70s, you are not necessarily being overly optimistic. However, once you reach the age of 67, your life expectancy is in the mid-80s.
It may be easier to envision yourself needing some help with your activities of daily living when you are an octogenarian.
According to the United States Department of Health and Human Services, over 50 percent of seniors will eventually need paid long-term care, and over a third will reside in nursing homes.
Medicare Coverage
You will be eligible for Medicare when you are 65 years of age if you have accumulated 40 retirement credits. These credits are earned when you work and pay self-employment or payroll taxes. The requirements are modest, so most people obtain the credits they need.
Medicare is a solid form of health insurance all things considered, but it does not cover long-term custodial care. The program will not pay for a stay in a nursing home, and it does not cover in-home care.
Long-Term Care Costs
Unless you have extremely deep pockets, it is not easy to pay for long-term care comfortably. The state of Connecticut has determined that the average cost for a room in a nursing home is statewide is $14,939 per month.
Depending on your resources and length of stay, nursing home costs could consume a significant portion of your legacy. And speaking of length of stay, the average is 12 months, and 13% of people who need custodial care require the assistance for more than five years.
Medicaid Planning
Now you can see why nursing home asset protection is an important consideration. The solution for most people is Medicaid, because this program will pay for long-term custodial care.
This is a need-based benefit, so you cannot qualify if you have more than $2,000 in your name. However, this is the figure for countable assets. Some property is not countable, including your home with a $1.071 million equity limit in Connecticut in 2024.
One vehicle is not counted along with household items and personal effects. Wedding rings, engagement rings, and heirloom jewelry are exempt along with unlimited term life insurance and up to $1,500 of whole life insurance.
Spousal Allowances
The spouse who is still living independently is entitled to a Community Spouse Resource Allowance. This is half of the couple’s assets with a $154,140 limit in our state this year.
With the exception of a $75-a-month personal needs allowance, income that is brought in by the institutionalized spouse must be used to help pay for the care that is being received. However, this requirement is waived if a healthy spouse is relying on the income.
They can receive a Monthly Maintenance Needs Allowance. The maximum allowance in Connecticut is $3,853.50, and the minimum is $2,555.
Income-Only Medicaid Trust
You can convey assets that are countable into an income-only Medicaid trust to develop a profile that will lead to Medicaid eligibility. The principal would be out of your reach, but you would be able to receive distributions of the trust’s earnings until you apply for Medicaid.
The assets would not count when and if you seek Medicaid eligibility, but timing is key. There is a five-year look back, so you have to fund the trust at least five years before you submit your application.
Take Action Today!
We are here to help if you are ready to work with a Glastonbury or Westport, CT elder care planning lawyer. You can call us at 860-548-1000 to set up a consultation, and you can fill out our contact form if you would rather send us a message.
