Long-term care costs are a very big concern within the elder law community. We practice law in New Jersey, and in our state, the median annual charge for a private room in a nursing home is $91,250 according to a Genworth Financial survey.
In certain areas of the state, the costs are considerably higher. For example, in northern New Jersey, the median annual cost for a private room is in excess of $137,000. The average length of stay is over two years according to a government survey, and one out of every 10 people in nursing homes will require the care for at least five years.
When you do the math, you are looking at some big numbers. If you have to pay for an extended stay in a nursing home out of pocket, the expenses could consume the inheritances that you always intended to leave to the people that you love.
If you are reading this with little interest because you know that you are going to qualify for Medicare when you reach the age of 65, we have some disconcerting news to pass along. The Medicare program will pay for convalescent care when you are recovering from an injury or illness, but it will not pay for long-term custodial care.
Medicaid is a government health insurance program that is jointly administered by the federal government along with the individual states, and this program does pay for long-term care. You may be aware of the fact that Medicaid technically exists to provide health insurance for people who have virtually no financial resources.
Perhaps surprisingly, Medicaid pays for most of the long-term care that is being received by seniors at the present time, and many of these people had assets and Medicare coverage when they retired.
It is possible to qualify for Medicaid by divesting yourself of assets before you submit your application. You could give direct gifts to loved ones who were in line for inheritances, but you could alternately convey assets into a Medicaid trust
Assets in a Medicaid trust would not be counted if you were to apply for Medicaid to pay for long-term care. You do have to be aware of the fact that a Medicaid trust is going to be an irrevocable trust, so you would not have access to the principal. You could however continue to receive income that is earned by the trust before you apply for Medicaid.
Schedule a Consultation
Because of complex program rules, you have to fund your Medicaid trust at least five years before you apply for coverage if you want to avoid a potentially costly penalty. If you would like to discuss the details with a licensed professional, contact us through this link to set up an appointment: Warren NJ Estate Planning Attorneys.