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Myths and Realities of Long-Term Care Planning
Myth. I will never end up in a nursing home.
Reality: Of those Americans reaching age 65 in any year, 24 percent are
expected to spend a year or more in a nursing home. Fifty-seven percent will
never enter a nursing home and 19 percent will spend less than a year in a
nursing home. Nine percent will spend more than five years. In South
Florida, typical nursing homes cost as much as $7,000 a month, or more than $84,000 a
year.
Myth. Medicare will pay for any long-term costs
I may have.
Reality: No. It will pay for up to 100 days of skilled nursing facility
care if you meet the certain requirements, including (1) you must have moved
to the nursing home within 30 days of a hospital discharge; (2) the hospital
stay must have lasted at least three days; and (3) you must receive a
skilled level of care. Medicare pays entirely for the first 20 days and
everything above a co-payment of $137.50 a day (in 2010) for days 21 through
100. The co-payment is generally covered by Medigap insurance. Medicare also
pays for home health care on a part-time or intermittent basis. However, you
must require a skilled component to your care to get this coverage, and
“part-time” generally means only up to 20 hours a week.
Myth. To qualify for Medicaid I will have to
give up my home.
Reality: You may keep your home as long as you intend to return to live
there, no matter whether you really can or do. However, generally, if the
home is in your probate estate at your death, the state may have the right
to recover whatever it has spent on your care. This depends upon whom you
name as the beneficiary of your home. An Elder Law Attorney can show you
how to leave your home to your intended beneficiary while keeping the home
outside of your probate estate.
Myth. If I apply for Medicaid, the
Department of Children and Families and the nursing home staff will reliably
guide me through the process.
Reality: Sometimes their help will be sufficient. However, they may
not know (or be willing to share with you) the intricacies of the law that
allow you to preserve some of your assets. They may not be able to advise
you on when (or how) to appeal a denial. Applications for Medicaid require
extensive documentation and can be quite time-consuming. It is in your best
interests to have an Elder Law Attorney guide you through the process.
Myth. Legally I can give away only $10,000 to
each of my children each year.
Reality: You can give away any amount, but you have to report gifts in
excess of $13,000 per recipient per year on an IRS Form 709. Generally, no
tax will be due unless your lifetime gifts exceed $1 million. This has
nothing to do with the waiting period penalty that will be imposed by
Medicaid if or your spouse give away assets within 5 years of applying for
benefits. Under current rules, a penalty (waiting period) of one month will
be imposed for each $5000 that you give away. The penalty starts when you
are otherwise eligible (i.e. when the applicant is down to $2000 in assets).
So, for example, if you give away $100,000 today and need Medicaid benefits
in 48 month, a 20 month waiting period penalty ($100,000/$5000 = 20
months) will be imposed. You will have to pay privately for care until the
penalty period expires.
Myth. I can wait to do long-term care planning
until I or my spouse gets sick.
Reality: Often it is too late. For example, if you are healthy and can
afford it, long term care insurance is your first line of defense to the
catastrophic financial losses of nursing home care. There are numerous ways
to make long term care insurance affordable for the average person. Also,
while you are healthy, be sure to have an Elder Law Attorney prepare a
Durable Power of Attorney and Designation of Health Care Surrogate for you.
Properly drafted documents can insure that your spouse, child or other
trusted person will have the ability to take whatever steps are necessary to
protect you and to preserve your estate. An accident, stroke or other sudden
change of health could make you incapable of executing these valuable
documents. Without these documents, your family could be forced to spend
thousands of dollars on guardianship proceedings for your protection.
CONCLUSION
You cannot predict whether you or a family member will require
long-term nursing home care. But if we define “long term” as a year or
longer, one in four of you will. Medicare will not pay these costs, which
leaves you with three choices: Long-term care insurance, your savings, and
Medicaid
Here is an overview of the Medicaid rules:
1.
The applicant can only have $2,000 in countable assets.
2.
If the applicant's income exceeds $2022 (2010 figure), the applicant
will need a trust to handle the excess.
3. Countable assets are everything that you and your spouse own
(individually and jointly) other than your home and other exempt and
non-countable assets (one auto, household goods, term life insurance,
irrevocable burial contract, etc.). The at-home spouse (community
spouse) is entitled to retain up to $109,560 (in 2010) in total countable assets and has no income cap.
4. Generally, all income of a nursing home Medicaid beneficiary goes
to the nursing home, except for a $35 a month personal needs allowance.
5. The community spouse is entitled to a share of the nursing home
spouse’s income if the community spouse’s own income does not reach a
certain amount .
6. Transfers by the Medicaid applicant or his or her spouse will
cause one month of ineligibility for every $3,300 transferred beginning with
the date of transfer.
7. The state may recover whatever it pays for the Medicaid
recipient’s care from his or her probate estate.
8. The Medicaid application process is long and cumbersome. Do
not expect to get sound advice from health care workers, friends, or
anyone but an experienced Elder Law Attorney. If you attempt to apply for
Medicaid on your own and are declined because of improper transfers or
untimely filing, you could lose tens of thousands of dollars in government
benefits.
9. Plan ahead, especially with a durable power of attorney and
designation of health care surrogate.
10.
With proper planning, you can preserve thousands of dollars of family assets
and be sure that you will have funds available to supplement your loved
one's nursing home care.
If you have questions about anything on this
website, or if you wish to schedule an appointment, contact Mr. Cohen at
(954) 400-5511
or by
E-mail.
e questions about anything on this
website, or if you wish to schedule an appointment, contact Mr. Cohen at
(954) 315-0355 or by
E-mail.
Mr. Cohen maintains two offices for the practice of
Estate Planning, Elder Law and Disability Law in Broward County, Florida
for the convenience of his clients:
Flamingo Falls Professional Center
1806 N. Flamingo Rd.
Suite 300
Pembroke Pines, FL 33028
and
Crossroads One
8201
Peters Rd., Suite 1000
Plantation (Fort Lauderdale),
FL 33324
For those of you who are unfamiliar with South Florida geography, Broward
County has 30 municipalities, including:
Coconut Creek,
Cooper City,
Coral Springs,
Dania Beach,
Davie,
Deerfield Beach,
Fort Lauderdale,
(Ft. Lauderdale),
Hallandale Beach,
Hillsboro Beach,
Hollywood,
Lauderhill,
Lauderdale Lakes,
Lauderdale-By-The-Sea, Lazy Lake,
Lighthouse Point,
Margate,
Miramar,
North Lauderdale,
Oakland Park,
Parkland,
Pembroke Park,
Pembroke Pines,
Plantation,
Pompano Beach,
Sea Ranch Lakes,
Southwest Ranches,
Sunrise,
Tamarac,
Weston,
Wilton Manors.
For
information on these cities, click on the appropriate link.
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