Protecting Your Financial Health from Nursing Home Costs

No one likes to think about getting older, but aging is unavoidable. And, as we mature, taking care of our health and wellness becomes even more important. Chances are, you’re already making good nutrition and exercise choices. But, how would you describe your financial health? Are you protecting your assets with an estate plan?

In 2018, the average cost of nursing home care in Wisconsin was over $8,300 per month. Unfortunately, nursing home expenses are anticipated to continue to rise three times faster than the general rate of inflation.

If you need supportive care from a nursing home because of aging and chronic conditions, it’s important to understand that health insurance or Medicare will not cover these massive costs. Now is the time to be pro-active. Learn how you can receive the care you need and protect your financial health at the same time.

Know your options when it comes to protecting your assets.

It is estimated that nearly half of all people that reach age 65 will need long term care assistance. You have three basic choices for care providers:

In-home care 

While most people prefer to remain in their homes, this isn’t always possible. To help determine if you are a good fit for in-home care, it is crucial to be honest about how much care you truly need. As of 2014, the average annual costs for in-home care in Wisconsin was $50,336.*

Assisted living facility

This type of facility is best suited for older adults who do not require constant care but may need assistance with medication management or other basic tasks. For a one bedroom single occupancy room, the average cost in Wisconsin was $46,200.*

Skilled nursing facility

This type of facility is for people who need medical care or daily therapy services from a registered nurse. It offers care 24/7. For a semi-private room in Wisconsin, the average annual cost was $87,363.*

First things first. Make sure your have a well-drafted estate plan.

Every estate plan needs to address the essentials: a will or trust, financial power of attorney, health care power of attorney, a living will, HIPPA waiver and a marital property agreement. If you have already completed an estate plan, it is important to re-evaluate it every couple of years to determine if it needs any updating, especially if there has been a change in your health. You’ll want to make sure your plan and the representatives listed continue to reflect your wishes. If you have not yet completed an estate plan, this will be your first step to protecting your long-term financial health.

*All prices are based on the 2014 Genworth Cost of Care Survey – Wisconsin.

 Long Term Care Insurance

Another important step is checking into long-term care insurance. Though long term care insurance can be expensive, it will provide a source of payment, in some cases, for in-home care and assisted living (whereas Medicaid will provide payment for only nursing homes).  A long term care policy, in most cases, will give you more options regarding your long term care.

Protecting your assets

Unfortunately, some people will not be eligible for a long term care policy because of finances or health conditions. However, you may still be able to protect some, if not, all your assets from the costs of nursing home using a couple of different strategies.

If you plan far enough ahead, you may be able to protect assets through the use of an irrevocable trust. An irrevocable trust requires you to give up control of the assets transferred to the trust.  However, a properly drafted irrevocable trust generally allows you to minimize taxes, protect your assets from the nursing home and still, in some cases, give you access to the funds.

You might also want to consider asset conversion. Many people mistakenly believe they can’t qualify for Medicaid because they own certain assets. But, the truth is, Medicaid allows for some flexibility.

The following assets will not be considered (or “counted”) by Medicaid.
  • Cash up to $2,000
  • Primary residence given the Medicaid applicant or his/her spouse resides there and the equity value is at $878,000 or less
  • One car at any current market value
  • Personal belongings and household items such as furniture and appliances
  • Pre-paid funeral and burial arrangements
  • Personal property that is essential to a person’s self-support (for example: farm, rental properties or real estate investments)
  • For a married couple, the non-institutionalized spouse can exempt half of the married couple’s countable assets up to a maximum of $126,420 for 2019 and the non-institutionalized spouse’s retirement plans.

Please keep in mind that Medicaid is a complex government program, jointly funded by the state and federal government. The guidelines are complicated and frequently change. The best way to make sure your long-term financial health is protected is to work with an attorney who understands Medicaid and has extensive experience and elder law knowledge. They can take the guesswork out of the estate planning process and give you confidence about your financial future.

Estate Planning Attorney Patrick Furman

About the Author

Patrick Furman is an attorney with Epiphany Law and has been practicing law for over 15 years. He focuses his practice on all aspects of estate, succession, and tax planning as well as probate avoidance, irrevocable and revocable trusts, life insurance, spendthrift and special needs trusts, along with wills, durable powers of attorney and advanced health directives. To learn more about protecting your assets, ask Pat a question.

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