Long-term care is not cheap. In fact, it is down-right expensive. The average annual cost of a nursing home room in the Cleveland Metropolitan area is $73,912.50. Moreover, betting that you will not need long-term care is not a good gamble. Seventy Percent (70%) of people over age 65 will need long term care during their lifetimes and no, Medicare won’t pay for it. Medicare doesn’t cover long-term care costs. Even if a number of criteria are met Medicare only covers the cost of a skilled nursing facility for up to 20 days, with the possibility of an additional 80 days on a co-payment basis. The average nursing home stay is 2.4 years.
With cost like that, long-term care can quickly deplete most people’s savings.
Medicaid in a need based program that will pay for Long Term Care costs. However, Medicaid’s resource limit is so low (currently $2,000 for a single person) that without proper planning, you will have to deplete all your savings before you will qualify.
One solution to this problem is a Medicaid Protection Trust.
If assets are transferred into the Medicaid Protection Trust five years before a Medicaid application is made, those assets will be protected from long term care costs and from collection from the state of Ohio after death. A trust is preferable over a gift to a family member for multiple reasons.
A trust provides protection from creditors and spouses of the trust beneficiaries. A trust ensures that the funds don’t go to unintended beneficiaries should the beneficiary die before you. A trust preserves a step-up in basis on your home, which means beneficiaries will likely pay little to no income tax on the sale of the home with the trust, whereas they would likely pay significant income taxes on the sale of the home if it were gifted instead.
In addition to the Medicaid Protection Trust, you should consider having a Financial Power of Attorney in place that permits Medicaid Planning for any assets not placed in Trust. It is essential that the Power of Attorney be prepared by an attorney experience in Medicaid Planning to ensure that the Power of Attorney has all the necessary provisions.
For more information on Medicaid Planning, contact a Cleveland Medicaid Planning lawyer.