As people are living longer and longer thanks to technology, long term care has increasingly become an issue. So what do you need to know? First, long term care will be a significant financial issue for adults age 65 and older in Minnesota. According to the American Association of Retired Persons (AARP), 12% of Minnesota’s population if age 65+ and nearly 107,000 residents are age 85+. The 85+ group, which is the age group most likely to need long term care, is projected to grow 61% from 2007 to 2030; so, a significant portion of Minnesota residents will have to confront this issue, and because long term care is expensive, it threatens their hard-earned savings.
In addition to the high cost of long term care, Medicare does not cover long term care – whether in a nursing home, assisted living facility, or people’s own homes. It does cover medical services in these settings, but not the cost of staying in a long-term facility or “custodial care”, which provides help with the everyday tasks of life, such as dressing, feeding, going to the bathroom, etc. Medicare does provide coverage for short term stays in these types of settings, but even that is subject to unexpected rules, such as the rule that you must have spent at least three days in the hospital as a formally admitted inpatient (not just for observation) before Medicare will cover short term stays in a skilled nursing facility.
Given the limits on Medicare coverage of long term care, you are left with either relying on long term care insurance or paying the fee with your hard earned assets. However, long term care insurance is expensive, harder to qualify as you age, and relatively rare. According to AARP, nationally, there were only about 7 million of such policies nationally in 2005. While obtaining long term care insurance is an important consideration, especially for younger people, there will be many people facing long term care that simply do not have this type of coverage. It is very rare for private basic health insurance to cover long term care, although there are an increasing number of financial products that offer Long-Term Care riders, such as annuities and life insurance policies, which can be explored.
Because relatively few people have long term care coverage or the assets to pay for their care in a long term facility, most are forced on Medical Assistance when they have exhausted their assets. To qualify for Medical Assistance, you must have very little income and very few assets, an amount that changes frequently based on the cost of living. If you do not meet the qualification, you will have to use your own income and assets to pay for your care, until you have exhausted them and you are eligible for Medical Assistance. This leads many to gift assets and income to their family, but probably the most important thing to know is that there is a 5-year look-back period for transfers of assets under Medical Assistance rules. This means that if you want to gift away your assets, you must be able to avoid long term care for at least 5 years or you will be deemed ineligible for Medical Assistance.
While all the rules, limitations and costs seem daunting, it is possible to plan for long term care. Depending on the situation, strategies may include a spend down of your assets in a smart and efficient way or gifting assets well before the need for long term care. Because Medical Assistance and Medicare are subject to strict rules and can be very confusing, it is important to speak with an experienced estate planning attorney as soon as possible. The sooner you address this concern, the more options you will have to plan for long term care. To speak with an experienced estate planning attorney, contact Tentinger Law Firm using quick contact form or call 952-953-3330.