Are you a "mature" American age 65 or older, do you care about someone who is, or do you anticipate becoming a mature American yourself? If yes, then you are in good company. According to the U.S. Census Bureau, Americans 85 and older are the fastest growing demographic group and, right behind them, 79 million baby boomers are moving into retirement age themselves.
However, with advances in age come additional health problems. Along with health challenges, there are special legal challenges that need addressing. The body of law addressing these challenges is commonly known as "Elder Law.”
Generally speaking, Elder Law uses specific legal tools to address the many emotional, logistical, and financial needs of mature Americans. Many of these Americans are concerned with two fundamental threats to their dignity: (1) becoming incapacitated, and losing control over their personal, health care, and financial decisions; and (2) running out of money due to the catastrophic costs of long-term care. Fortunately, these threats may be minimized, or even avoided, through properly coordinated legal and financial planning.
As the number of birthday candles increase on your birthday cake, so do the odds of becoming incapacitated due to an injury or illness. Whether incapacity strikes suddenly or over time, the consequence is the same. Either you will have properly appointed decision-makers of your own choosing through legal planning in advance, or a judge (who likely does not know you or your loved one) will appoint someone for you under the ongoing supervision of the court. The pre-planning alternative is less expensive, easier on your loved ones, and protects your privacy from the public record.
According to commonly cited statistics, if you are age 65 and single, then the odds are about 50 percent that you will need care in a nursing home or other long-term care facility at some point. For married couples, odds are about 70 percent that one spouse will need such care. For how long? Nationwide, the average stay is four-to-five years.
In Virginia, a year in a nursing home is estimated to cost an average of $90,250. Little wonder 50 percent of married couples with one spouse in long-term care are impoverished within one year of admission. For singles, that percentage jumps to 70 percent.
You may be thinking, "I have Medicare, so I don’t have to worry about long-term care, right?" Wrong. Medicare only pays for acute nursing home care (e.g. rehabilitation), not chronic care. Chronic care is needing help with “activities of daily living” like bathing, eating, dressing, continence, toileting or transferring, not to mention dementia or Alzheimer’s. Even for acute care in a skilled nursing home, Medicare is limited to paying for up to 100 days with strict eligibility requirements, and full payments are limited to the first 20 days, with private co-payments thereafter. Also, your Medigap (i.e., Medicare Supplement) policy will not pay for your long-term care either, but may pay the Medicare co-payments for days 21 through 100.
While Medicare is solely a federal program, Medicaid is a joint state-federal program. Each state operates its own Medicaid system, and while it must adhere to federal guidelines to receive federal funds, Virginia interprets the federal law very strictly, and benefits that may be available in other states are not necessarily available in Virginia. Throughout the country, there are strict income and asset guidelines that must be satisfied to be eligible for Medicaid coverage.
Any transfer of assets for less than fair market value (i.e., a gift) may subject you to a lengthy period of Medicaid ineligibility under a complex and confusing web of Medicaid regulations. Nevertheless, as with most areas of life, proper planning is rewarded and the failure to plan is not. Through proper Medicaid planning, you may be able to legally qualify for Medicaid and protect your assets for yourself now and your loved ones later.
If you are in good health now, long-term care insurance (LTCI) is another means to pay for your care. In addition, LTCI is sometimes used in conjunction with Medicaid pre-planning to pay for care until you are legally eligible for Medicaid.
In can be hard to admit that you may become incapacitated and perhaps need expensive long-term care in the future. However, denial is not a strategy and there is no time like the present to plan. A debilitating illness or injury could strike any of us at any time. When you are ready to explore your options, contact us to schedule an initial consultation, and attend one of our free educational workshops.