When you are planning ahead for your retirement years, you will naturally budget for expenses that are relatively easy to anticipate. The golden years can be a reward for all of your hard work, a time when you can enjoy leisure activities, travel, and cross things off your bucket list.
This is well and good, but there is the other side of the rainbow. The twilight years can present a financial challenge in the form of long-term care costs.
Everyone knows that some people need living assistance, and there are those that reside in nursing homes. However, you may assume that there is a good chance that you will not be one of them.
In fact, 70 percent of seniors will need help with their activities of daily living according to the Department of Health and Human Services. Over 30 percent will reside in nursing homes, and many more will receive in-home care from paid home health aides.
One of the things to keep in mind is the fact that the life expectancy for someone that is in their 60s is longer than the overall life expectancy for all Americans. It is 87 years for a 67-year-old woman, and 85 years for a man.
When you envision yourself as an octogenarian, it may be easier to wrap your head around the idea that you may ultimately require paid long-term care.
Medicare will not pay for a stay in a nursing home, and it does not cover in-home care. This is the most pressing issue that we address as elder law attorneys.
Aging in Place
If you can get the help you need in your own home, you can avoid a residential care setting. This can potentially save you money if you get the assistance from family members and friends.
Assisted living community apartments have modifications that make life easier for people with physical limitations. You can transform your home in a similar manner if you work with a builder that understands aging in place concepts.
There are many different modifications that can be made depending on your specific needs. As time goes on, you can continually adjust your living spaces to adapt to changing circumstances.
Medicaid Home and Community-Based Services (HCBS) Waiver
The Medicaid program will pay for a stay in a nursing home if you can gain eligibility. There is also a Medicaid Home and Community-Based Services (HCBS) Waiver program that will cover in-home care.
Since Medicaid is only available to people with limited resources, there is a low asset limit. In most other states, it is $2000, but here in New York, it is $15,900 in 2021.
You may wonder how you could get the HCBS Waiver to pay for in-home care when your home is worth considerably more than $15,900. It is actually possible, because your home is not a countable asset, but there is an equity limit of $906,000 in 2021.
While you can qualify if you are a homeowner, you have to be concerned about Medicaid estate recovery. If you are in direct personal possession of your home at the time of your passing, Medicaid could put a lien on the property.
With this in mind, you could convey the home into an irrevocable Medicaid trust, but you have to act in advance because there is a look-back period. For full-blown Medicaid coverage, it is five years, and for the HCBS Waiver it is 30 months. With the help of an expert elder law attorney, you may be able to minimize, or even avoid entirely, the impact of the look-back period.
The implementation of the 30 month look-back is a new development, and in all likelihood, it will not go into effect until July 1, 2021.
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You can see the dates if you visit our Rochester estate planning webinar page, and when you identify the session that works for you, follow the instructions to reserve your spot.