Will you have enough cash for home care?

Getting old is not for sissies. Especially if one’s health begins to fail. Yet most of us will agree that getting old beats the alternative. To make sure we enjoy life, many of us exercise, try to eat right, and maintain some emotional balance. Still, despite our best efforts, some folks’ health does begin to fail and eventually in-home assistance or even nursing home care may be required.

As anyone who has had a loved one in that situation knows, those costs can be devastating. A lifetime of asset building can quickly disappear into the morass of nursing home expenses. Healthcare costs in this country are rising at rates that double to triple the inflation rate. A significant number of people at the end of their lives need to live in nursing homes, and these costs can drain a lifetime of earnings very quickly.

However, for people whose assets have been substantially drained, the government, under the Medicaid provisions, steps in and provides care. Otherwise, our sick elderly citizens would be put out on the street, creating an untenable situation. According to National Guardian Life, “To qualify for Medicaid certain requirements must be met.

These may include your age, income and other assets (anything that can be sold for cash) and whether you are a U.S. citizen or a lawfully admitted immigrant. The rules for counting your income and resources vary from state to state and from group to group. There are special rules for those who live in nursing homes.

“Because Medicaid eligibility is based on need, a person is not eligible to receive benefits if they have income or assets that exceed the limits established by each state or county. If someone’s assets are more than the state allows, he or she will have to liquidate their assets to pay for care before they will receive aid from the program.

Assets include checking/savings accounts, mutual funds, stocks and bonds, deferred annuities, the cash value of most life insurance policies, revocable living trusts, retirement funds, and burial trusts beyond the minimum amount.

“It is important to consider ways to ensure that you can protect your assets and still receive assistance from Medicaid. States can look back to find asset transfers 60 months prior to the date an individual applied for Medicaid. These transfers may restrict the amount of insurance benefits you receive. It is important to contact an elder law attorney before you attempt to qualify for Medicaid coverage.

“One of the ways you can protect your assets from being considered a liability against Medicaid approval is to prepay your funeral. This must be done properly in order to be legally binding. First, you must purchase an insurance policy specifically for your final expenses.

With the help of your insurance agent, you then irrevocably assign this policy to a trust or funeral home. Up to a legally determined amount, most Medicaid agencies exclude these funds when determining eligibility.

This process ensures that you will have the money you need for the remembrance that you want. It will also relieve your family of the burden of funeral expenses during their time of loss. Finally, it is a lawful way to reduce your assets and make sure you are eligible for the health care assistance you need.”
These plans are not for everyone, but certainly should be considered by anyone who is concerned about leaving at least some assets to their loved ones.

Don't miss last month's Money Matters column here.

Dan Searles, CFP, is a financial planner and a Registered Representative offering securities and advisory services through National Planning Corporation, member FINRA/SIPC, and a Registered Investment Adviser. Medallion Financial Group and NPC are separate and unrelated companies.

National Planning Corporation does not endorse the opinions expressed in this column. The information here is not to be considered as financial, tax or legal advice. As with any financial, tax or legal matter, consult your qualified adviser before taking action. No investment strategy can ensure a profit or protect against a loss. As always, past performance is not indicative of future results.