Legally Protecting Your Assets from Skyrocketing Nursing Home Costs

Featured blog sent in by: Snyder & Wiles, PC

6 out of every 10 Americans who reach age 65 will need long-term care at some point in their lives. And the older they become, the greater the risk they will need some form of long term care. 

Medicare does not pay the expenses of long-term care incurred for day care at adult centers, home care by relatives or employed caretakers, and nursing home care. Medicare pays limited benefits for skilled nursing care only. $341,840 is the estimated lifetime cost of care for someone with dementia; $123,600 is the maximum amount of assets that a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid for 2019. 
The only options available to a Lehigh Valley resident to cover the costs of long term care are as follows: 

1. SELF-PAY: 
The estimated annual cost for a nursing home care facility is about $113,000 per year. At that rate, any family would go broke in no time caring for a loved one. 

2. LONG TERM CARE INSURANCE: 
Long Term Care Insurance is not cheap, costing anywhere from $2,000 to $10,000 per year for a couple depending on how old you are when you purchase the coverage and it is subject to an increase in premiums on a yearly basis. 
The average Nursing Home stay is around 4 years. So you’ll need a policy that covers at least 4 years. 

3. MEDICAID 
Medicaid financed nursing home care is available to those who qualify based on income and assets. 
Available resources to an applicant for Medicaid must be less than $8,000. 
With proper and advance planning, you do not have to go broke or let your family live impoverished in order to have proper care when you need it. 

ONE SOLUTION IS IRREVOCABLE TRUSTS: 
Medicaid Regulations impose a 5-year look back period for any transfers made to reduce assets in order to qualify for Medicaid benefits. 

An Irrevocable Grantor Trust cannot be changed or terminated by the Grantor, once it has been created. It will require administration at the death of the Grantor and cannot easily be reached by the Grantor’s creditors. Unlike a Revocable Trust the Grantor does not own the assets. All of the property held in an Irrevocable Trust may not necessarily require probate. 

An Irrevocable Trust is a primary tool in most Asset Protection and Estate Plans. The trusts can own almost any asset while providing shelter from the Grantor’s and Beneficiary’s divorce, creditors and legal problems. The trust can help keep assets in the family. This flexible tool allows Grantors to provide benefits for generations. These valuable benefits arise because once the Grantor transfers ownership of an asset to the trust; she/he has surrendered all incidents of ownership over that asset. It is the trust’s asset now, not the Grantor’s. 

​Typically, the Irrevocable Trust may be subject to PA Inheritance tax because the transfer to the trust is made for less than adequate consideration, and the trust reserves the right to income and designation of beneficiaries. But, this type of trust if properly planned for, may help insure your loved ones are taken care of and avoid you going broke in a nursing home. However, planning well in advance is the key to making any Estate Plan work for you. 

To learn more, contact us at Snyder & Wiles, PC, 7731 Main Street, Fogelsville, PA, or 610-391-9500, or visit us at www.snyderwileslaw.com. We’ve been protecting your assets and your loved ones for over 22 years in the Lehigh Valley.