Planning for Long-Term Care Should Be Done A Long Time Before You Need It
52% of all adults over the age of 65 are projected to spend time in a nursing-home or need some other form of long-term care in their lifetime. We work with clients who want to proactively plan for the cost of long-term care without sacrificing their quality of life to pay for it.
The high cost of long-term care is one of our clients’ biggest fears. Genworth, one of the leading providers of long-term care insurance, estimates that someone living in South Carolina would pay $69,350 for a semi-private room in a nursing home or as much as $75,008 for a private room. In-home care costs could be $42,328, based on 44 hours per week of care. Adult day care (8 hours a day, 5 days a week) could cost up to $14,381. And assisted living facilities could cost $37,500 per year.
In North Carolina, a semi-private room in a nursing home is about $75,190, while a private room could cost as much as $82,125. In-home care median costs could be $41,710, based on 44 hours per week of care. Adult day care (8 hours a day, 5 days a week) could cost up to $13,260. And assisted living facilities could cost $36,000 per year.
Without proper planning, all but the wealthiest families will see their savings disappear trying to cover these costs.
There are two things we advise people who want to plan for long-term care to consider – purchasing long-term care insurance and planning to rely on Medicaid.
Long-term care insurance became really popular in the 1980s and 90s. Premiums were relatively low and the benefits offered were quite good. It turns out what seemed too good to be true in fact was. Because long-term care insurance was a new product, the companies offering it were estimating what their future payouts would be, and they did a bad job of this. People are living longer, holding on to their policies instead of letting them lapse, and are happier to spend more time in assisted living facilities than in the past. The Wall Street Journal recently ran an article detailing how bad assumptions have wreaked havoc on the long-term care market.
What the article doesn’t discuss is the fact that a lot of people are still really interested in purchasing long-term care insurance. And that is a good thing. The companies offering long-term care plans and the bureaucrats that regulate them have learned their lessons. Prices are higher, coverage is lower, but it is still a good investment for many people.
As an alternative to long-term care insurance, or even in addition to it since the coverage offered today is not what it once was, it is wise to also think about what estate planning moves need to be made if a client needs to go on Medicaid.
Medicaid is the single largest payer of nursing home bills in America and serves as the option of last resort for people who have no other way to finance their long-term care. While Medicaid eligibility was not overly restrictive in the past, there has been a steady drift towards more complex and limiting rules. These changes have resulted in complex eligibility requirements for those in need of Medicaid benefits. It’s no longer as easy as reviewing one’s bank statements. There are a myriad of regulations involving look-back periods, income caps, transfer penalties and waiting periods to plan around. We help clients make the moves they need to make now so that as many assets as possible can be used or passed onto future generations without impacting Medicaid eligibility in the future.
The hardest part about planning for long-term care is facing the reality that one day you may not be able to take care of yourself. But facing that reality, and making an appointment with an experienced estate planning attorney can help reduce your stress and sooth your fears.