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When you have always been capable of handling your own affairs, it can be hard to envision a time when you will need help with your day-to-day needs. Of course, you probably experience things today that you couldn’t wrap your head around when you were 15 years old. According to the United States Department of Health and Human Services, 70 percent of seniors will need help with their activities of daily living. More than one third of elders will eventually reside in nursing homes.
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We practice in Austin, Texas, and the average cost of nursing home care in our area is over $11,000 a month according to Caring.com.
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The average length of stay is about a year, but 35 percent of people that require care need assistance for a minimum of two years. An attention-getting 13 percent receive long-term care for more than five years.
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Since Medicare is a health insurance program for seniors, and so many elders need living assistance, you may assume that the program would cover custodial care. In fact, this is not the case, so you have to look elsewhere for assistance.
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Medicaid is another jointly administered federal/state government health insurance program that will pay for a stay in a nursing home.
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The first thing you have to understand is the fact that everything that you own does not count. Your home is not a countable asset, and you can retain possession of a motor vehicle. Wedding rings, heirloom jewelry, and engagement rings do not count against you. Medicaid does not consider your household items or personal belongings, and you can have unlimited term life insurance. Up to $1500 of whole life insurance is allowed, and you can have the same amount set aside for final expenses. Prepaid burial plots are permitted.
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The quick answer is yes with an asterisk. A healthy spouse is entitled to a community spouse resource allowance which is equal to half of the shared countable assets. However, there is a limit that is updated annually to account for the cost of living. Suffice to say that it is in the vicinity of $130,000. There is also a minimum resource allowance that is hovering around $26,000. Income that is brought in by the spouse that is living in a nursing home must be contributed toward the cost of the care with the exception of a $60 a month personal needs allowance. This requirement is set aside if a healthy spouse is relying on the income to maintain a reasonable standard of living. They can receive a community spouse resource allowance, and the limit is in the $3200 a month range the time of this writing.
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You can give direct gifts or fund an irrevocable trust to qualify for Medicaid, but you have to act in advance because of the five-year look-back period. All divestitures must be completed at least five years before you submit your application for Medicaid coverage. If you violate this rule, you cannot qualify until you wait out a penalty period that is based on the cost of nursing home care and the amount of the divestitures. To explain through the use of a simple example, if you give away enough to pay for a year in a nursing home, your eligibility would be delayed by 12 months.
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We Are Here to Help!
Nursing home costs can be devastating, but if you take the right steps in advance, you can preserve your legacy for the benefit of your loved ones.
If you are ready to develop a nursing home asset protection plan, we are here to help. You can schedule a consultation appointment if you call us at 512-258-9455, and you can fill out our contact form if you would prefer to send us a message.