Paying for Long-Term Care

According to an article published in the Wall Street Journal on May 14, 2012, if you are married and you and your spouse both reach the age of 65, there is a 70 percent probability that one of you is going to need long-term care. As if that is not troubling enough, a great many of us are completely unprepared to pay the cost of long-term care. Skilled nursing in Hawai‘I can easily top $8,000 per month. How do people handle that?

For those of us who are not incredibly wealthy, one approach is long-term care insurance. You should talk with an insurance agent who focuses on the complexities of long-term care insurance before you plunk any money down. The older we get, the odds of being insurable decrease, and the premiums get higher. The bottom line is that the sooner you look into long-term care insurance and get your policy in place, the more likely you will be able to afford the premiums.

An alternative to insurance is Medicaid. It goes by different names in different states (Hawai‘i’s version is called MedQUEST), but it is run jointly by our federal and state governments. The federal government sets the overarching rules and provides funding. States are allowed to adopt their own rules for qualification and enforcement. Think of it as government nursing home care insurance for those with limited financial resources.

Medicaid is “means-based.” Having too much income or too many assets will disqualify a Medicaid applicant. However, having “assets” is not the same as having the money to pay for care. Those undeveloped lots in Nevada that you own, are assets, but they may be impossible to sell.

For those with assets exceeding the Medicaid limits, giving assets away may disqualify them from Medicaid assistance too — if the transfers violate the “look-back” period designed to keep people from gaming the system. Of course, a kupuna might have had innocent intentions when making a disqualifying gift — before the need for long-term care arose. Regardless, any gift (even charitable) is a red flag on Medicaid applications.

Each state takes a different approach; it is easy to run afoul of the rules and be disqualified from benefits. The good news is that knowing the rules can help you plan for a worst-case scenario where you or a loved one might need assistance with long-term care costs.

Another critical consideration is that Medicaid may limit your options for care facilities or quality of care. So we should not all assume that Medicaid is the best option for us or our family.

Scott Makuakane, Counselor at Law
Focusing exclusively on estate planning and trust law.
Watch Scott’s TV show, Malama Kupuna
Sundays at 8:30 p.m. on KWHE, Oceanic channel 11
www.est8planning.com
O‘ahu: 808-587-8227 | maku@est8planning.com