Despite the fact that so many people will need long term care, there are few good options for making this type of care affordable. Medicare does not pay for most forms of nursing care outside of very specific circumstances; the only government program that does is Medicaid. However, qualifying for Medicaid often requires “spending down” to a point where you fall under the maximum income qualification. From a practical standpoint, this means you could lose all your savings and assets.
There are, however, a few ways to protect your assets-at least partially-and pay for your long term care needs. We are not attorneys or financial planners; we strongly recommend that you consult a professional about your specific financial circumstances and available payment options. However, here are a few general options.
Buy long-term care insurance. Private health insurance plans generally do not cover long-term care. That’s covered by separate long-term care insurance. However, there are pitfalls in purchasing this type of insurance. In the past, several long-term care insurance companies have gone under, leaving their insureds without coverage despite paying premiums for years; in addition, to face rising medical costs, many insurers have had to hike premiums dramatically. However, under the right circumstances, long-term care insurance can go far in protecting your assets when buying long-term care.
Transfer your home. Most of the time, you don’t have to sell your home to qualify for Medicaid. In fact, if you do sell your home for its market value, you may no longer qualify-or you may be required to put all your proceeds toward nursing home costs. If you hang on to your home, you can usually still qualify for Medicaid-but the state of Texas may file a claim against your house after your death. This is called “estate recovery.”
However, if you have a surviving spouse, a surviving child under 21 years old, a child of any age with certain disabilities; or an unmarried adult child living on the property, the state may not file an estate recovery. There are also undue hardship conditions that would exempt your property; click here http://www.dads.state.tx.us/services/estate_recovery/ for more information.
Most of the time, if you transfer ownership of your home to someone else to avoid estate recovery, you will face a penalty and a period of exemption from Medicaid coverage that could basically negate the benefits you would get by transferring the property in the first place. However, under certain conditions, you can transfer your home to certain family members without penalty. This depends strongly on your own personal situation, however, and it is not a decision to make without first consulting an attorney.
Put your assets in an irrevocable trust. A trust allows you to transfer ownership of property or assets from yourself to a beneficiary. If you put your home or other assets into an irrevocable trust, you no longer have ownership of it-and can’t get it back without the trustee and beneficiary’s approval.
Protecting your property and assets in paying for nursing home care is always an intensely complicated situation, and varies depending on your individual circumstances. Consult an attorney to find out what your best options are-and hopefully you should be able to preserve your assets for future generations.