You might think that either you or your parents will pay for the nursing home care they may need. Unless your family is independently wealthy, you will experience severe sticker shock if you attempt this route.
You might think that government programs will provide for long-term care. While it’s true that government programs can help defray some costs, the price of admission can be steep.
It’s important to understand the differences between the types of assistance available and to learn about how you may be able to plan for the long-term care of your parents.
Medicare vs. Medicaid
People often confuse Medicare and Medicaid. This is an easy mistake to make given how similar the names are.
Medicare is a federally operated program. It provides coverage for certain medical services to people who are 65 or older. Medicare helps to pay for these costs regardless of whether a person lives in a long-term care facility or lives independently at home. However, Medicare does not make allowances for “custodial care” of the type a person would receive in a nursing home. Any expenses concerning room, board, or living assistance will have to come from another source.
Medicaid is a catch-all term used to describe federally funded programs administered by the states. The Medicaid program is designed to provide health care assistance to those with low incomes. Unlike Medicare, Medicaid will help cover the costs of nursing home care.
It seems Medicaid is the best option, right?
It would be great if you could simply apply for Medicaid assistance and not have to worry about your nursing home financial concerns. However, Medicaid is only available to those with income restrictions, and it doesn’t take much to have too much income. Thus, most people find themselves in a position where they have to “spend down” assets to meet the income threshold.
You can’t simply give assets away or transfer them to another family member to qualify for Medicaid. The government frowns on people attempting to game the system and will “look back” over the past five years for evidence of suspicious transfers that may have been done to qualify for Medicaid.
The most effective means to ensure you or a loved one receives Medicaid coverage is to plan well in advance. You may be able to place most of your assets into a trust. This will exclude those assets from counting against your income while still providing you with a degree of control over those assets. Other estate planning tools can also be an effective means of planning for long-term care. You should discuss all of your options with a skilled legal professional.