If you plan ahead with foresight, your active retirement years can be full of quality time with your family, travel, leisure activities, and relaxation. We assist clients that are looking ahead toward their golden years, and it is also important to prepare yourself for the twilight years that will inevitably follow. Admittedly, some of the eventualities are not particularly pleasant to consider, but it is prudent to face them head on and plan ahead appropriately.
As people make wiser lifestyle choices and medical technology advances, Americans are living longer and longer lives. At the present time, if you live until you are 67 years of age, your life expectancy is 85 years or so on average. Between the last two censuses, the segment of the population that was between 85 and 94 grew faster than any other. When you combine all of these facts, you can see that there is a very good chance that you will become an octogenarian at some point in time.
In general, longevity sounds like a good thing, and it can be, but Alzheimer’s disease looms large for people who are among the “oldest old.” The Alzheimer’s Association is perhaps the best source of information on the Internet when it comes to the disease, its impact, and ways that it can be combated. According to research that you can find on their site, approximately 4 out of every 10 people that are at least 85 years of age have contracted Alzheimer’s. When you look at all senior citizens that are 65 and older, the figure is 13 percent.
Nursing Home Costs
A very significant percentage of people with Alzheimer’s disease are going to require a level of care that only a nursing home can provide. It may be logical to assume that Medicare would pay for a stay in a nursing home if you require around-the-clock care for Alzheimer’s induced dementia. In fact, the program does not pay for custodial care, regardless of the underlying condition.
Unless you are extremely wealthy, this is a very challenging situation, because nursing homes are quite expensive. There is a company called Genworth Financial that devotes a great deal of time and effort into ongoing research that is intended to keep a finger on the pulse of long-term care costs around the country.
According to Genworth, in the United States as a whole, the median annual cost for a private room in a nursing home in 2017 is over $97,000, and for a semi-private room it is over $85,000. California is even more expensive. They are projecting a 4 percent per year increase in the charge for a private room over the next five years, so things are going to get worse before they get better.
The survey also drills down to the state level, and they look at long-term care costs in larger cities within states. Our estate planning and elder law firm is located in Sacramento, California. Most things are more expensive in northern California than they are in many other parts of the country, and nursing home care is no exception. In the Sacramento area, you are looking at an annual cost of over $122,000 for a private room in a nursing home, and the rate of increase estimate is 5 percent by 2022.
The Medi-Cal Solution
As we have stated, Medicare will not pay for nursing home care. However, Medi-Cal is another government run program that will pay for long-term custodial care. You are probably aware of the fact that it is only available to people with very limited financial resources, so there is a low asset limit of just $2000.
In spite of this, many people that we work with devise strategies that lead to Medi-Cal eligibility. First, it is important to understand the fact that some things that you own are not counted, including your home, your vehicle, and your wedding and engagement rings. Heirloom jewelry is not counted, and your personal effects and household items are not considered to be countable assets for Medi-Cal purposes.
It is possible to divest yourself of assets that are counted so you can obtain Medi-Cal eligibility. You have to act in advance, because there is a 30 month look-back period in the state of California. Without proper planning, if you give away assets within 30 months of submitting your application, you can be penalized, and have your approval delayed, so you would have to pay out-of-pocket during that interim.
We Are Here to Help!
As you can see, Alzheimer’s is a looming threat, and nursing home costs can be devastating. If you would like to learn more about nursing home asset protection, call us at 916-437-3500 to schedule a consultation or contact us online.
