Today, people are living longer which leaves many adults with questions about how to care for their aging parents. How will we cover the costs of long-term care? Does Medicare pay for services at home or in a skilled nursing facility? How can we protect our parents’ assets? Because the healthcare and long-term care costs associated with aging can easily exhaust an elder parent’s financial resources, it is crucial to plan ahead. The surest way to resolve these issues is by enlisting the services of a trustworthy elder law and estate planning attorney. In the meantime, this article is a brief discussion of the long-term care options for your parents.
What is Long-term Care?
As a result of a chronic illness or disability, your parent may no longer be able to care for him or herself for extended periods of time without assistance. Your parent may need assistance with activities of daily living such as eating, bathing, dressing, toileting or transferring. At first, depending on the reason for the onset, only minimal assistance may be required but increased assistance will be required over time. Long-term care services are a continuum of care that include care at home through home health aides and other caregivers, adult day care, various assisted living options, continuing care communities and nursing home care.
What happens if my mom or dad becomes incapacitated?
To be able to assist your parent, in the event of incapacity, it is crucial to have legal authority to manage his or her personal affairs and healthcare needs. It is important that the proper documents are put in place before illness or injury strikes. The estate planning documents designed for this purpose include durable powers of attorney, advance medical directives (health care proxy) and living wills. If these documents have not been put in place before an illness or injury strikes, it may be necessary to establish a guardianship.
Long-term Care Planning: 101
First, let’s dispense with the notion that Medicare covers the cost of long-term care. In fact, this federal program limits reimbursement for nursing home or rehabilitation services to a certain number of days — after a patient has received hospital inpatient care for at least three consecutive nights, and met the other legal requirements for coverage. Therefore, it is necessary to consider other payment options for long-term care. For those with sufficient resources, self-funding may be possible.
On the other hand, another option is long-term care insurance. This type of coverage pays for a variety of services, including personal and custodial care in the home, an assisted living facility or a nursing home. In addition, reimbursements will cover a portion of the assistance needed for activities of daily living – eating, bathing, dressing, toileting or transferring. Finally, premiums are based on factors such as the policyholder’s age, as well as the maximum amount of daily services and total number of days covered by the policy. It is important to note, however, that all policies are not the same and long-term care insurance may not be affordable for many middle-income families.
What is a Medicaid?
Medicaid — the joint federal-state program that provides medical assistance to low income individuals or those 65 and older — is the nation’s largest payer of nursing home care. Because the program is means tested, individuals with sufficient financial resources may not be eligible. To qualify for Medicaid, your parent must have exhausted (“spend down”) his or her savings.
Even middle-income families with resources should consider the possibility that their parent may at some point need to qualify for Medicaid. Typically, families want to ensure that assets are protected to provide the best care for the parent. For married clients, it is particularly important, as each spouse typically wants to ensure that one spouse’s need for nursing home care will not leave the other destitute. There are various tools that can be used to minimize the possibility that all assets will need to be spent down if one or both need long term care.
One tool is the so-called “Irrevocable Medicaid Trust”. Generally, the trust is designed to take ownership of your parent’s home and assets so that the trust assets are not countable for Medicaid eligibility. The trust can only be changed under limited circumstances. There is also a five-year “look-back period,” which means that the trust must be created and fully funded five years before your mom or dad becomes eligible for Medicaid. Ultimately, it takes a skilled elder law attorney to navigate the complexities of Medicaid planning and the use of irrevocable trusts.
The Takeaway
As many can attest, seeing a parent age is never easy and ensuring they receive the healthcare and long-term care assistance they need and deserve can be a challenge. If you have questions about long-term care options for your parent, contact an experienced elder law and estate planning attorney today.
About the Author: Elga Goodman, J.D., LLM, concentrates her practice on elder law, business and personal taxation issues, including domestic and international estate planning, the administration of trusts and estates, and closely held business planning. Elga advises clients on estate planning techniques aimed at ensuring that assets pass to the intended beneficiaries while minimizing the state and federal tax burdens. Additionally, Elga guides clients through the complicated area of Medicaid planning, wealth preservation, and avoidance of spousal impoverishment through specialized gifting and trust techniques.
