You might be together for many years to come, but it's safer to plan for the unexpected.
The golden years are meant to be relaxing, fun and enjoyable, but not everyone is so lucky. NPR says there are more than 5 million people in the U.S. who are living with Alzheimer's disease, and that number is expected to grow as a generation of baby boomers age.
Alzheimer's disease is only one of many serious health conditions that plague some older Americans. And while you and your spouse may have promised each other that a nursing home would never be considered, the future is always uncertain. Some advanced levels of care can't be given at home, even by in-home health workers. You need an elder care plan, and the best time to think about it is before, not when, you need it.
Medicare Rules are Strict, and Complicated
Medicare covers nursing home expenses when specialized care is necessary, according to Medicare.gov. This means if you or a loved one need help with more than just daily activities, and the help is something that can't reasonably be performed at home, Medicare will cover the costs of a skilled nursing facility. But it's often not whether, but how Medicare covers these expenses that's so confusing.
The Van Deysen law office in WV explains that Medicare doesn't just step in and cover nursing home expenses; they expect a lot in exchange. For example, for Medicare to pay at all, the patient usually has to be admitted to a hospital for three days, and then transferred to the nursing home. If the three-day hospital requirement isn't met, Medicare can elect to pay none of the initial costs.
The time to start preparing is while both of you are still healthy.
After Medicare Comes Medicaid
Medicaid picks up where Medicare leaves off, but the rules are even stricter. You have to declare all of your assets, and expect to lose most of them if you haven't protected your money well in advance. Assets that are exempt for a while include your home or farm, household items, one vehicle, burial plots, and a few others. Assets that you must declare include your income, cash and some assets that you could liquidate, such as savings bonds, certificates of deposit, revocable trusts, IRAs, other vehicles besides the one you can keep, and essentially anything else that is not protected.
One of the most common thoughts when faced with the Medicare surrender is, "I'll just give my kids, a friend, or trusted relative some of this money, and it will be safe." It wouldn't be the first time Medicaid had encountered the same thing. Expect an audit, of sorts, and expect Medicaid to ask about any withdrawals or loss of assets within the past 5 - 7 years. They are thorough.
Plan Now to be Safe Later
There aren't any slippery ways around Medicare and Medicaid rules. Although Medicaid doesn't leave your spouse without any assets or income, what's left is quite small and even the family home may be in jeopardy after your spouse's death. Medicaid's Minimum Monthly Maintenance Needs Allowance allows your spouse to have an income of approximately $1,800 a month, but this may vary.
The time to plan for unexpected nursing home care is many years before it could happen. Because no one knows for sure, the safest method is to plan now. There are some laws that allow elder care attorneys to protect at least some of your assets. You could protect your home, some cash, stocks, and bonds, and you may even be allowed to set up an irrevocable trust, which Medicare can't claim. The Trustee would pay your spouse a regular income from the trust, but all of this must be done at least 5 years in advance.
Medicare and Medicaid rules are complex. You need an attorney who is well-versed in elder care law to help you save which assets you can, and plan for losing the ones you can't protect. Saving now can help you build a safety net should you or your spouse need nursing home care in the future. If you are young, there's more time to save, which gives you the potential for a larger net.
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