Elder Law: Planning for Long-Term Care as You Age

Elder Law is an aspect of estate planning that focuses on helping families make sure that their aging and ill loved ones get the health care they need in an affordable way.   Does your estate plan address the possibility that you may need long-term care as you age?

Many seniors are surprised to learn that skilled nursing facilities are not covered by Medicare. Because health care costs have risen much faster than most people’s investments have grown, social security income and retirement savings alone are often insufficient to pay for the cost of a nursing home – especially if one spouse is healthy enough to stay at home and your resources must still be available to cover their living expenses too.   In these instances, Medicaid is often the best recourse for ensuring access to affordable long-term care.

Medicaid is government assistance with health care costs for some people with limited income or resources. Even if you have paid taxes for decades, you only qualify for Medicaid if you meet the government’s narrow definition of “poor.”   However, it is a common misconception that you must deplete almost all your assets before you can apply for this assistance.  With foresight, that tragic reality can be avoided.  There are asset protection strategies that can give you and your spouse options to receive the quality of care you deserve.

The sooner you plan for long-term care the more options you have.  Most planning strategies include asset reallocation that enables your family to retain the assets you earned over your lifetime.  However, when determining if you qualify for the program, Medicaid looks back at any gifts you have made within the past five years. Your goal should be to build a long-term care plan at least five years before you need it.

It is important to note that long-term care planning means more than making gifts to your family.  Outright gifts will expose your assets to bankruptcy, divorce, or creditor issues.  It is safer to use a unique type of trust, often referred to by elder law attorneys as a Medicaid Asset Protection Trust.  When drafted and funded correctly, this trust can make sure your money stays in the family protected from unforeseen hardship while still allowing you to qualify for Medicaid when you need it. Attorneys that practice elder law are trained to do this complex advanced estate planning. (I recommend looking for an attorney that is a member of the National Academy of Elder Law Attorneys.  You can search for one near you at www.naela.org/findalawyer.)

You may be wondering what happens if you do not have the luxury of planning in advance. The planning tools available to you or your spouse are more limited, but there are still strategies that can expedite your qualification for Medicaid while preserving a significant amount of your savings.  If you have a loved one that needs immediate care, do not make the mistake of thinking your only way out of that dilemma is to spend all their money.  Seek the advice of an experienced elder law attorney.  Your loved one’s quality of life depends on it.

This article was first published in the March 2021 volume of Silver Notes, the official newsletter of Broken Arrow Seniors, Inc.