About 70% of individuals over age 65 will require at least some type of long-term care services during their lifetime. This can run the gamut from assisted living to skilled nursing care and the cost can range anywhere from $50,000-$100,000 per year or more.
Read more to learn what your options are for planning for the long-term care of yourself or a loved one.
PAYING FOR LONG TERM CARE
- Private Pay. Returns on your investments may not keep pace with health care inflation, which has significantly outpaced general inflation for years, and with life expectancies increasing, you may run out of money just when you need it most.
- Long Term Care Insurance. Speak to a knowledgeable adviser and consider all the possibilities so you can make an informed decision based on what you believe is best for you and your family. Things to consider:
- Does the policy offer inflation protection?
- Hybrid - or "linked-benefit" - products combine life insurance with long-term care benefits.
- Medi-Cal Long Term Care. Another option is to do some planning to qualify for Medi-Cal long term care benefits.
To be eligible for Medi-Cal long term care, a person can only have $2,000 in assets. Some assets, however, are exempt (they don't count towards the $2,000). Among them are your home, your automobile, IRAs and work related pensions, business property, and annuities (subject to certain restrictions). In addition, the "at-home" spouse can have $126,420 in assets and income of $3,161 per month.
There are several ways to bring your assets within the Medi-Cal resource limits and to raise the monthly income the at-home spouse is allowed to have. These planning techniques include:
- Spend down. You can change non-exempt assets (cash) to an exempt asset by paying down/paying off your home mortgage and making needed repairs or capital improvements to your home. Paying off debts (car loans and other bills), purchasing a new car (if needed), medical equipment, or an annuity (be sure it meets Medi-Cal requirements or it may disqualify you) are other ways to prudently spend down excess cash.
- Gifting. You can give away assets and still be eligible for Medi-Cal depending on when you gave away the asset and how much you gave away. There is a 30-month "look-back" period that applies to gifts made during the 30 months prior to the date you apply for Medi-Cal, which can result in a period of ineligibility for Medi-Cal benefits but, with careful planning, significant assets can be transferred within the 30-month look-back period without incurring any period of ineligibility.
- Planning techniques for married couples. In certain cases, a court order can be obtained to allow the at-home spouse to retain assets over the $126,420 limit and/or to retain income over the $3,161 income limit, to transmute property to the at-home spouse and to amend the couple's estate plan so Medi-Cal benefits will not be jeopardized if the at-home spouse passes away
MEDI-CAL ESTATE RECOVERY
After the death of a Medi-Cal recipient, the State will place a claim on his or her estate for the benefits received. However, legislation which became effective on January 1, 2017, severely restricts Medi-Cal's ability to recover from estates of persons who received Medi-Cal benefits.
The state can no longer recover from the estates of surviving spouses and registered domestic partners of Medi-Cal recipients. The new legislation also limits recovery to only those assets subject to California probate. So assets held in a revocable living trust are not subject to Medi-Cal post-death recovery claims.
If you'd like to speak with one of our attorneys regarding Medi-Cal long term care planning for you or a loved one, please call our office at (818) 338-3252.