WHAT IS LONG-TERM CARE PLANNING AND WHY DO I NEED TO THINK ABOUT IT?
The goal of long-term care planning is to ensure individuals can get the proper care and support they need when they need it. While long-term care can involve various services, given in different settings, the associated costs are often a significant financial burden on families. As a result, the best time to think about your own plan is before you require assistance, while you are still able to consider your options and make appropriate decisions that can save money and stress.
There are two ways you can have long-term care provided for you:
1. Long Term Care Insurance is an insurance product that helps pay for the cost of long-term care which generally covers home care, assisted living, adult daycare, respite care, hospice care, nursing homes, etc. Each long-term care plan varies based on the age, health, and benefits offered. The younger and healthier a person is, the less expensive the premium. However, most younger individuals are not thinking about their long-term care and may find insurance is not available to them when they are older for health reasons. Some people may not qualify for insurance as most policies require medical underwriting. Therefore, while long-term care insurance may be a preferable product, it is not always an available option.
2. Medicaid is a means-tested program that is jointly funded by the state and federal governments and managed by the state, with each state currently having the right to determine who is eligible for its implementation. States are not required to participate in the program although all currently do. Accordingly, each state has its own Medicaid eligibility rules.
When determining eligibility for Medicaid in New York there are two “tests” that you must pass: (1) the Asset Test; and (2) the Income Test.
According to current rules in the year 2019, for a couple to be eligible to receive care, their total assets must be less than $22,800.00 and their monthly income less than approximately $1,267.00. For an individual to receive care, his or her total assets must be less than $15,450.00 and his or her income less than approximately $859.00 a month. There are strategies available to protect additional income if home care services are needed.
As there are exceptions to every rule, there are assets that are considered “exempt” from the Asset Test, which means they do not count towards the $22,800.00 or $15,450.00, respectively. Some exceptions include (but are not limited to) retirement accounts, Holocaust reparations and your primary residence (assuming it meets certain criteria). Those exempt assets can stay in your name and would not disqualify you from Medicaid eligibility. However, the one caveat is that Medicaid will likely put a lien on your primary residence and/or make a claim against your estate after your death if you keep your primary residence in your name. To deal with this, most people transfer their residence to their children in conjunction with their Medicaid plan.
There is currently a five-year look-back period for Medicaid nursing home care and/or other institutional care. This means if an individual needs nursing home care, he or she will need to provide all financial statements for the previous five years. Medicaid will “look back” for that period of five years to see whether the individual made any transfer of assets without fair compensation or consideration. If the individual has made transfers without fair compensation or consideration, then there is a “penalty period” during which time the individual will have to privately pay for his or her nursing home care before Medicaid will start to pay. The penalty period is calculated using a formula based on the Medicaid regional rate for nursing home care at the time the individual is eligible to receive care.
There is currently no look-back period for Medicaid home care (Community Medicaid).
This is just a small sampling of the issues to contemplate when thinking about your long-term care plan. Don’t wait until the last minute when you need the care but have no way to pay for it. An experienced attorney can help you address the specific issues you may face, implement an appropriate plan and protect your assets for your heirs.
If you are ready to think about your long-term care plan, contact us for a consultation.
For more information on planning for health problems, read Protect Yourself and Your Family When Facing a Health Care Crisis.