Like most people, you probably would prefer not to dwell on the fact that you might one day end up in a nursing home. While it is certainly not a good idea to spend too much time worrying about something that cannot be predicted, failing to plan for the possibility that you will need to pay for nursing home care in the future is also a bad idea. If you have incorporated retirement planning tools and strategies into your comprehensive estate plan, you already know how important it is to plan for your Golden Years if you want to live comfortably during those years. The problem is that nursing home expenses could completely derail your retirement plans if you failed to take into account the possibility that you (or a spouse) will need long-term care (LTC). Now is the time to figure out how you will pay for nursing home expenses should the need arise for LTC in the future.
How Likely Are You to Need Nursing Home Care?
No one really wants to know how likely it is that they will end up in a nursing home; however, the only way to plan for the future financial impact of the need for LTC is to face the possibility now. When you enter your retirement years, around age 65, you will stand about a 50-50 chance of one day needing LTC. Those odds will continue to increase as you age. By the time you reach age 85, your odds of eventually needing nursing home care will have increased to about 75-25. Keep in mind that if you are married, or have a partner, you both share the same odds of needing LTC care.
How Will You Pay for Nursing Home Expenses?
The primary reason why planning for the possibility that you will one day need nursing home care is the high cost of that care. As of 2016, the average monthly cost of LTC in the State of Missouri is just over $5,000. Annually, that puts the average cost at just over $60,000. Ten years from now that figure is expected to increase to about $84,000 and in 20 years to $114,000. The average length of a stay in LTC is 2.5 years. Consequently, if you need nursing home care in 20 years, the average cost of that care is expected to run you close to $300,000! The reason it is so important to understand how expensive nursing home care will be is that neither your basic health insurance coverage nor Medicare will likely help with expenses relating to LTC. Unless you can cover the high cost of nursing home care out of pocket, that leaves Medicaid as your only hope for help.
While Medicaid does cover LTC expenses, you will first need to qualify for benefits. Unless you planned ahead, qualifying for Medicaid could put your assets at risk because of the program’s income and asset limits. If the value of an applicant’s “countable resources” exceeds the program’s limit, Medicaid will impose a waiting period on the applicant. During the waiting period an applicant will be expected to “spend-down” the excess assets. In essence, this means you will be expected to liquidated your assets and use the proceeds to cover your LTC expenses during the waiting period. Understandably, most people do not want to have to give up the assets they spent a lifetime working hard to accumulate. The key to avoiding this eventuality is the work closely with an experienced Missouri Medicaid planning attorney to incorporate Medicaid planning strategies in your overall estate plan early on in your life. By doing so, you can protect your hard-earned assets and set yourself up to qualify for Medicaid to help pay nursing home expenses if necessary in the future.
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding how you will pay nursing home expenses, contact the experienced Missouri Medicaid planning lawyers at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
- How Will You Age in Place and Be Able to Die at Home? - August 16, 2020
- Beneficiary Designations and Other Non-Probate Transfers - August 15, 2020
- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020