Our Sacramento elder law firm helps clients prepare for the challenges that they may face during the latter stages of their lives. Without question, long-term care costs are at the top of this list. Many people are unpleasantly surprised to find out that Medicare will not pay for living assistance. This is a situation that impacts a very significant percentage of Americans, because 70 percent of people who are reaching the age of 65 on any given day will someday need help with their activities of daily living.
Once you reach this age, it becomes likely that you will live into your 80s and perhaps beyond. There are many different underlying reasons why people require the type of care that can only be received in a nursing home, but Alzheimer’s disease is a major culprit. It strikes four out of every 10 people that are 85 years of age and older, and this age group is growing faster than any other.
Nursing homes are expensive all around the country, but here in the greater Sacramento area, the expenses exceed the national averages. You can expect to pay approximately $120,000 a year for a private room in a nursing home at the present time. The costs are rising year-by-year, so if you need long-term care in a decade or two, the figure could be quite a bit higher.
Many people reside in assisted living communities before they eventually move into nursing homes, and these facilities are very expensive as well. According to a study that has been conducted by a respected company that offers financial products for senior citizens, the median annual cost for a one bedroom unit in an assisted living community in Sacramento is over $45,000 in 2018.
If you combine multiple years in one of these units with a year or two in a nursing home at the end of your life, the expenses can be staggering. These costs could consume everything that you have always intended to leave to your loved ones after you are gone.
Asset Protection
All of the above sounds like some pretty dismal news, but there is a widely embraced solution that can allow you to preserve your assets for the benefit of your family members. Medi-Cal is a jointly run federal-state government program that does pay for long-term care. Since it is intended for people with sparse resources, there is an asset limit of just $2000. However, everything that you own is not counted when you apply for Medi-Cal.
Your home is not counted, and there is no equity limit in the state of California. You can maintain ownership of your household goods and personal effects, heirloom jewelry, wedding rings, and engagement rings. One vehicle is excluded, and you can have as much as $1500 worth of whole life insurance and unlimited term life insurance. A final expense fund of $1500 is also allowed.
If you are applying for Medi-Cal to pay for long-term care as a married individual, your spouse would be entitled to a community spouse resource allowance. This is half of the shared countable assets, but there is a limit. At the time of this writing, the maximum allowance is $123,600. The healthy spouse may also continue to utilize income that the institutionalized spouse is receiving if it is needed to maintain an acceptable standard of living. This is called the Monthly Maintenance Needs Allowance, and it stands at $3,090 in 2018.
Even though the asset limit is modest, it is possible to take financial steps that lead to Medi-Cal eligibility at the ideal time. You could convey assets into an irrevocable trust, and of course, you could simply give direct gifts to your loved ones. However, there is currently a 30 month look-back period in California. Without proper planning, you may be penalized and your eligibility is delayed if you give anything away within 30 months of the submission of your application. People that live here in California are actually fortunate in this regard, because there is a five-year look back period in other states.
Consult With an Elder Law Attorney!
As you can see when you digest all of this information, a great deal can be lost if you wind up paying for long-term care out of your own pocket. If you would like to explore nursing home asset protection strategies, we would be glad to provide you with a no obligation consultation. You can set up an appointment right now if you give us a call at 916-437-3500, and you can also reach out through the contact page on this website.
