Have you ever heard that saying, “Not making a decision is making a decision?” Timing is everything when you age and are confronted with the state-to-state specific boundaries to the 5 yr look back, not knowing what your final day of life on earth is up. There are many times sensitive things in this later season of life, so it’s time to get your legal house in order! Providing the information below will allow you to start thinking and making decisions.
Do you have the means to pay for an assisted nursing home that will transition into full nursing home care, if need be, on average it runs about 10k per month (varies state to state and facility to facility).
Do you purchase long term care insurance (LTC) around 60 years of age so that it is “affordable” (still very expensive) to protect all your assets from being used up by a nursing home and before Medicare/Medicaid will kick in? Long term care insurance won’t help you if you don’t buy it. But what if you don’t need a nursing home? Well then you paid all those expensive premiums for nothing. Let’s take a moment to use some approximate figures because you need to know this as you navigate whether its right for you or not. If long term care insurance cost you say $550/month at 60 years old and you paid it for 20 years which brought you to 80 years old you would have paid out $132,000 in premiums.
One year in a nursing home is approx. $100,000. The average stay in a nursing home is 2 yrs. So that would cost $200,000 of coverage for the $132,000 you paid in LTC premiums so that you could protect all your hard-earned assets and you could carry on with your plans to leave a financial legacy as you had hoped.
It’s important to talk about numbers in this so you get the real look into what I’m talking about.
A few other notes on LTC there generally is a cap of coverage as well as a time deductible. Meaning 60 or 90 days before LTC kicks in, meaning you are paying out of pick for those days of nursing home care before your policy covers the cost. Also, upon deciding to purchase LTC be sure to make sure there are care takers in the area you reside. I’ve known people who purchased LTC insurance which includes an in-home care benefit but if the LTC company doesn’t have enough employees to carry out the service you paid for it create an unfortunate situation. If you’d like to know, more call a long term care provider near you.
If you are blessed to have assets you’d like to pass along to your family or charity you must be aware of your state rules. For example, currently in NYS there is this 5year look back that if you were to gift your assets with 5 years of needing nursing home care the nursing home has the right to those funds for your nursing home are before they tap into Medicare/Medicaid funding. To be clear let me give you an example. You gift your home to your son/daughter and after 4.5 years of doing so our in a position where no one can take care of you and you’re in need of a nursing home. The nursing home has the ability to “look back” over the last 5 years of you life and see you gave your house to your son/daughter, let’s say it was assessed for $100,000 and now you son lives in the house. What would happen is you’d be responsible to pays for the first $100,000 of nursing home bills before Medicaid or Medicare kicks in. There is current discussion in NYS to end this 5 yr look back as well as not being able to use your assets as a determination for Medicare nursing home coverage but as of right now it exists. Knowing this helps you plan. Without a plan your bound to get lost.
To be in the know gives power and removes ignorance that can get the best of us. As mentioned earlier in Chapter 5 ignorance is bliss until it’s NOT! To not have a basic understanding of the topics in this chapter will set you up for being bamboozled. It’s your job to get educated enough that you won’t fall into a sales pitch, but rather be of sound mind in what you choose or not.