Your estate plan should focus on more than just the distribution of your assets after you are gone. Which additional goals you include in your plan will depend on your unique needs and wishes. One component you may want to consider including in your estate plan, however, is nursing home planning. The staff at the Northern California Center for Estate Planning & Elder Law discuss why nursing home planning is important.
Will You Need Nursing Home Care?
The average life expectancy in the U.S. has almost doubled in the last 100 years. Living longer is certainly good news; however, the longer you live, the greater your odds are that you will need long-term care. The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68 percent for people age 65 and older. Of those who do become disabled or cognitively impaired, about 40 percent will need nursing home care. Given the importance of the care you receive and the cost of that care, planning for the possibility that you will need to enter a nursing home at some point in the future makes sense. One of the most important reasons to include nursing home planning in your comprehensive estate plan is the cost of that care. As of 2020, the average nationwide cost of a month in long-term care is around $8,500. In California, it is over $9,300 per month. Experts tell us that in 20 years that figure will increase to over $15,000 a month. With an average length of stay of two to three years, it is easy to see how the cost of nursing home care can deplete a retirement nest egg if those expenses must come out of pocket.
Paying for the High Cost of Nursing Home Care
Nationwide, the average cost of a year in long-term care is over $100,000 in 2020. The cost of LTC will do nothing but increase in the years to come. You may depend heavily on Medicare to cover health care expenses as a senior; however, Medicare only covers long-term care following a hospital admission, and even then, only for a short period of time. Knowing that, you cannot depend on Medicare to cover your nursing home costs if you incur them in the future. Moreover, most health insurance policies also exclude LTC costs. You can purchase a separate long-term care insurance policy; however, you will want to weigh the cost of paying LTC insurance premiums for many years against the benefits the policy will provide down the road. Pay particular attention to what the policy covers, when it will start covering expenses, and for how long it will pay your nursing home costs.
How Can Medi-Cal Planning Help?
Over half of all seniors currently in nursing home facilities rely on Medicaid to help cover the high cost of their care. Unless you have the resources to cover the cost of nursing home care out of pocket and indefinitely, you may be among them if you need nursing home care in the future. Medi-Cal (California’s Medicaid program) will only help with your nursing home expenses if you qualify for the program. To be eligible, you must contend with very low “countable resources” limits that can put your retirement nest egg at risk if you failed to plan ahead. Planning ahead means including Medi-Cl planning in your comprehensive estate plan.
Choosing a Nursing Home
Along with planning to cover the cost of nursing home care, finding the right facility is imperative when the time comes that you need care. Doing your homework when searching for a nursing home is crucial to ensuring that the care you (or your spouse) receive is the best possible care. In California, the California Department of Public Health offers a list of licensed nursing homes as does Medicare.gov, the government’s official site for Medicare.
Please download our FREE estate planning checklist. If you have additional questions or concerns about nursing home planning, contact the Medi-Cal Planning Staff at the Northern California Center for Estate Planning & Elder Lawby calling (916)-437-3500 or by filling out our online contact form.