One of the greatest fears of older Americans is that they may end up in a nursing home. According to the U.S. Department of Health and Human Services, more than 70 percent of Americans over the age of 65 will need long-term care services at some point in their lives; and 40% of them will end up in a nursing home. According to the 2017 Genworth Cost of Care Survey, the median cost of private room nursing home care in the State of Florida is a whopping $106,580.00 per year!

Most People Aren’t Covered For Long Term Care

Unfortunately, nearly all forms of employer-provided health insurance and disability insurance do not cover long-term care. Also, contrary to common belief, Medicare will not absorb long-term care costs. Medicare only partially covers up to 100 days of long-term care, and only if the person has previously been in a hospital for three consecutive days prior to needing long-term services. Buying long-term care insurance may alleviate these financial concerns; however, few people have insurance because they don’t think they need it, they find the products difficult to understand, or they wait too late to obtain it at a reasonable cost.

When a person needs long-term nursing home care, Medicaid benefits may be the only thing that can prevent the person from being wiped out financially.  A nursing home resident does not financially qualify for Florida Medicaid benefits if he/she has more than $2,000.00 in assets and more than $2,205.00 in monthly income (subject to exemptions). The nursing home resident also doesn’t financially qualify if his/her spouse has assets exceeding $120,900.00 (subject to exemptions). Moreover, Florida’s Medicaid program penalizes certain transfers of assets made by nursing home residents for up to 5 years prior to applying. These restrictions often cause nursing home residents to pay out of pocket until they run out of money and subsequently qualify for Medicaid to pick up the cost.

Elder Law Medicaid Planning May Be Able To Help Clients Meaningfully Address Long Term Care Issues

Fortunately, in many cases, steps can be taken to facilitate Florida Medicaid eligibility and eliminate or reduce the penalty period by using legitimate legal methods which would be disclosed to Medicaid. There are legal strategies that estate and elder law attorneys can recommend and implement for clients to achieve a host of important goals, including (1) ensuring they get the health care they need, (2) qualifying for Medicaid or other public benefits if available, (3) preserving and protecting assets for themselves and their family, and (4) ensuring that clients’ spouses do not become impoverished. This is possible even if the client is already in a nursing home.

Pre-Planning May Be Able To Help Clients Preserve Most Assets And Qualify For Future Long Term Care Benefits

“Pre-planning” is where it appears that the clients have a reasonable likelihood of not needing to apply for at least 60 months after the transfers are complete, thereby allowing the transfers to occur 5 years before any eventual Medicaid application. If all goes well and the client does not need Medicaid for more than 60 months after planning is complete, nearly all assets involved in the planning can be protected. Typical pre-planning techniques could include gifting to an irrevocable Medicaid asset protection trust to provide long-term asset protection for trust beneficiaries, tax advantages not possible through outright gifting, and flexibility of planning options. Additionally, long term care insurance could provide financial protection for Medicaid gifting by covering the persons during the 60-month period after gifting.

Crisis Planning May Be Able To Help Clients Protect Certain Assets And Obtain Immediate Long Term Care Benefits

“Crisis planning” is where the persons involved clearly cannot wait out 60 months before applying for Medicaid, such as when the person is already at a nursing home.  Depending on the circumstances, crisis planning may be able to protect about one-half of the client’s assets. Valuable crisis planning techniques could constitute gift and Medicaid-compliant annuities and promissory notes. Further, in crisis planning cases, it’s possible for just as much of the assets of a married couple to be protected as can be in pre-planning cases.