Elder Law - Planning for the Costs of Long-Term Care, Assisted Living and Nursing Home
Failing to plan for the cost of long-term care can be devastating. Without planning, an unexpected need for long-term care can substantially reduce your independence and make you totally dependent on the generosity of family or the government. The cost of unanticipated long-term care, moreover, can easily cost you everything, and deny your family an inheritance.
Conversely, by taking precautionary measures, you can greatly increase your independence and your options, if long-term care becomes necessary. Planning can also safeguard assets for your beneficiaries. No one who has needed long-term care has ever said “I wish I hadn’t planned for this.”
Attorney Peter Walsh has extensive experience with long-term care planning. Click here for a free download of his book, “The Basics of Wisconsin Medicaid.” Attorney Walsh presents seminars on the subject (click here to review his recent PowerPoint presentation on “Wisconsin Medicaid Eligibility”), and he is available for a telephone consultation at 414-276-5000.
What is Long-Term Care? Long-term care describes the care required for an individual who, due to a disability, whether by an illness, accident, cognitive impairment (such as Alzheimer’s), or old age, needs assistance performing activities of daily living, e.g., eating, bathing, dressing, continence, transferring, and toileting. Long-term care often involves the most intimate aspects of a person’s life – what and when he or she eats, personal hygiene, getting dressed, and using the bathroom. While long-term care is commonly associated with care in a nursing home, it can also be obtained at home or in assisted living. Proper planning can greatly increase the availability of long-term care at home.
High Costs and Increasing Need: Long-term care is extremely expensive. An average semi-private room in a Milwaukee area nursing home costs more than $7,000 per month in 2009. Despite these costs, the need for such care is increasing. It is now estimated that 60% of all Americans will need long-term care at some point in their lives. For those who are age 65 years or older the number is closer to 70%.
How is Long-Term Care Paid for? Most people pay for long-term care through one or more of the following:
- Expending their income and savings towards their care. At the rate of more than $7,000 per month, most savings can be exhausted in a short time. Those who elect this option may exhaust all their assets and leave nothing to pass on to their loved ones.
- Obtaining private long-term care insurance which pays a portion or all of the costs of long-term care. Such policies can be expensive, and they are often not available to elderly or disabled individuals.
- Receiving government entitlement benefits through Medicare. Medicare benefits are limited to only certain qualified individuals and for only a limited period of time of no more than 100 days.
- Receiving government welfare benefits through Medicaid. There are strict income and asset limitations on Medicaid eligibility. A single person must have only $2,000 in countable assets before he or she can receive Medicaid benefits.
For more explanation of the common long-term care planning terms click here.
Planning to Pay for Long-Term Care: Long-term care planning generally falls into one of three categories:
- Alternative funding: Obtaining long-term care insurance to pay for long-term care. Long-term care insurance can provide the most options; it is often referred to as “stay at home insurance” because it can pay for care at home by a family member or an unrelated caregiver.
- Sheltering Assets: Minimizing the total personal cost of long-term care by sheltering certain assets. When long-term care insurance is too costly, other planning techniques are available to shelter assets from the cost of long-term care.
- Crisis Planning: Saving assets when long-term care is immediately necessary. Despite a common misconception, assets can be sheltered or passed on to children even after a nursing home admission. Timely professional assistance can provide substantial financial benefits.
For more detailed information on the subject of long-term care planning see Attorney Walsh’s book “The Basics of Wisconsin Medicaid,” and his recent PowerPoint presentation on “Wisconsin Medicaid Eligibility.”
Additional Resources Available on the Internet:
Wisconsin Department of Health Services
Coalition of Wisconsin Aging Groups
Wisconsin Pool & Community Trusts
SeniorLaw: Resources
National Care Planning Council