You don't have to "sell the farm" to pay for Mom's long term care.
“Mom has to go into the nursing home. Should we put our names on the deed of her house?" “Is the nursing home going to take mom’s home when she dies?" “Should we start giving away mom’s assets to try to save them?" These are some of the most frequent questions we hear from people who are faced with a loved one who may already or will soon need long-term or nursing home care. Fortunately, with proper legal planning, the house, assets, and inheritance can be saved, but the uninformed or misinformed may just end up having to pay the price and put that unfortunate “for sale" sign in the front yard.
According to the U.S. Department of Health and Human services, nearly three out of every four Americans over the age of 65 will need long-term care services at some point in their lives. Forty percent will enter a nursing home, and twenty percent of those in a nursing home will be there for more than five years. With these high statistics, it is virtually certain that you will eventually be responsible for paying for or providing expensive long-term care for a family member or for yourself. While most people intend to stay in their own homes as long as possible, there often comes a point where the level of care needed exceeds what family members can provide. At that point, expensive nursing home care may be required.
Since 2002, MetLife Financial has conducted annual surveys on long-term care costs. According to the 2011 survey, the average cost of a private room in a Texas nursing home is $188 per day. That’s almost $69,000.00 per year! The high cost of long term care, and figuring out how to pay for it, can be a source of great stress and anxiety for those needing the care or for those called upon to provide the care for a spouse or parent.
There is a great deal of confusion and misinformation regarding the different options available to help pay for long-term care. When surveyed, over half of all Baby Boomers thought Medicare would pay for their long term care. Almost half thought their private health insurance would cover the care they needed. In reality, Medicare will only fully cover the cost of long-term care for up to 20 days. Private health insurance won’t cover anything!
So how will mom’s care be paid for? If she doesn’t have long-term care insurance, nursing home employees, social workers, or helpful friends will usually advise her to spend down all of her assets (including the family farm) on the nursing home care. Then, once she’s almost destitute and has only $2,000 left to her name, she’ll qualify for Medicaid. Once she qualifies for Medicaid, Medicaid will pay the nursing home bill for her. The vast majority of people, unaware that there is an alternative to this option, will follow this conventional wisdom and end up spending down their assets in order to qualify for Medicaid. After working hard and saving all their lives, they end up spending their entire life savings on nursing home care, and leaving nothing to their children or grandchildren. Facing this prospect, many people will try to save their assets by gifting them to their children. This can be a huge mistake since Medicaid will penalize transfers made in the five years prior to applying for assistance and require the applicant to private pay. This can be a devastating situation for someone who gave all their money away only to find out that they have to pay for their own care, and they no longer have any money with which to do so!
The Medicaid qualification rules are complicated. Because of their complexity, and the fact that high penalties exist for those who accidentally break the rules, most people who don’t work as Elder Law Attorneys don’t realize that anything else can be done. Fortunately, there are alternatives. In most cases, if someone goes through the proper legal steps, the law allows a married person who needs Medicaid to save up to 100% of their assets. A single person who needs Medicaid can save well over 50%. With proper legal planning, the outcome does not have to be as devastating as others have encountered.
Whether mom is already in the nursing home, or wants to plan ahead just in case, proper legal planning can help save her assets so that they can be passed down to her children and grandchildren as an inheritance, rather than being depleted by nursing home costs. If you or someone you love is facing the stress of paying for long-term care costs, don’t believe it when you are told that the only option is to spend down all of the assets. Contact the attorneys at The Voeller Law Firm for assistance. We can help get mom qualified, and preserve her assets so you don’t have to put that “for sale" sign on the family farm.