Like most people, you may prefer not to think about the likelihood of needing nursing home care for you, or a spouse, at some point down the road. The reality, however, is that the longer you live the higher the odds are that you will eventually require nursing home care. If the time comes that you (or a spouse) do need the type of care only found in a nursing home, are you prepared for nursing home costs? Because if you fail to plan ahead, it could put your nest egg at risk if you end up turning to Medicaid for help covering those costs. The best way to avoid finding yourself in that position is to include Medicaid planning in your estate plan well ahead of time.
Facing Reality – Will Nursing Home Care Be Necessary?
We all hope that we will be able to remain in our own homes throughout our “Golden Years” and spend our last days in our own bed. For some people, that is exactly what happens. For many, however, physical and/or mental deterioration eventually leads to the need for long-term care (LTC). When you enter your retirement years you are facing a 50 percent chance that LTC will become necessary. By age 85, those odds increase to a 75 percent chance. If you are married, your spouse has the same odds as you do, making it even more likely that one of you will be faced with nursing home costs at some point down the road.
Can You Afford Nursing Home Costs?
Most people assume that nursing home costs are high, but they don’t realize how high. For 2016, the average cost of a month stay in a LTC facility nationwide was about $6,500. With an average length of stay of 2.5 years, that puts the average LTC bill at almost $200,000. Figures for the State of Illinois are, on average, just below the national average; however, if you are in a metropolitan area you can expect the cost to be higher. Moreover, nursing home costs are expected to continue to rise for the foreseeable future. In 20 years, you can expect to pay about $11,000 per month in Illinois for nursing home care, putting the bill for an average stay at well over $300,000.
How Will You Pay for Nursing Home Care?
Not only is nursing home care costly, but neither your basic health care coverage nor Medicare will likely cover it. Most health insurance plans exclude costs associated with LTC unless you purchased a separate LTC plan at an additional cost. Medicare only covers LTC expenses under very specific circumstances and, even then, will only pay for a short stay in a LTC facility. Unless you can afford to pay for LTC put of pocket, that leaves Medicaid as your only option for help covering your LTC expenses.
Medicaid Will Cover Nursing Home Costs, but…
The good news is that Medicaid does cover costs associated with LTC. The bad news is that if you failed to plan ahead for the possibility of needing to qualify for Medicaid, your assets could be at risk. Medicaid has both an income and an asset limit that applicants cannot exceed. The asset, or “countable resources” limit is often as low as $2,000. Although assets such as your home and a vehicle are exempt, there is a good chance your assets will exceed the limit. If they do, Medicaid will impose a waiting period during which time you will be expected to “spend-down” those assets until their value drops below the program limit. The end result is that you will have to liquidate assets to pay for your LTC expenses until you meet the eligibility requirements for Medicaid. The way to avoid this unwanted outcome is to incorporate Medicaid planning strategies into your estate plan now so that if you do need to qualify for Medicaid down the road your assets will be protected and you will meet the eligibility guidelines without having to ensure a waiting period.
If you have additional questions or concerns regarding nursing home costs or Medicaid planning, contact the experienced Illinois Medicaid planning attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.
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