You Need a Plan to Avoid Losing Your Nest-Egg to Nursing Home Costs

For most people, even retirees and other seniors, the idea that you might have to spend time in a nursing home or extended care environment isn’t something you think about a lot. Unfortunately, the reality of the situation is that the older you get, the far more likely you will be to have to live in a nursing home at some point. While only a small percentage of people in their late 60s or early 70s need nursing home care, that number rises significantly the older you get. With the average cost of a year in a nursing home in California now exceeding $84,000, you can significantly reduce your assets even by having to stay in a nursing home for only a short while.

When it comes to preserving your assets against the potential cost of extended care expenses, you do have some options. Unfortunately, Medicare and most private health insurance programs will not cover these expenses, and private extended care insurance can be very expensive. If you rely on your children to pay for at least half of your medical expenses, your children can list you as a dependent and deduct a part of those costs.

However, deductions will not make up for the majority of expenses, and you may also want to consider Medi-Cal planning. Through Medi-Cal planning, you structure your assets so you can apply for Medi-Cal once you need nursing home care.  Medi-Cal in California has very restrictive enrollment requirements, and you will need to begin planning years before you actually enter a nursing home. However, if you are able to enroll, Medi-Cal will cover all the expenses.

Another option available to certain wartime veterans and their surviving spouses to assist with payment of long term care costs are benefits available through the Veterans Administration.

Planning in the areas of public benefits is very complex and full of traps for the unwary.  It is best to work with an experienced and qualified elder law attorney who specializes in this type of planning.

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Timothy P. Murphy

Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes.

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