Most people do not give much consideration to the matter of long-term care. We all know that some elders need it, but it is easy to assume that you will never be one of them. Is this a realistic expectation?
Inconvenient Truth
The United States Department of Health and Human Services has stated that seven out of seniors will require assistance with their activities of daily living. Many of them will be able to get the help they need from people that they know for free, at least for a while.
This being stated, just over half of senior citizens will need long-term care that is provided by a paid professional, and 35 percent will enter nursing homes.
These are some sobering statistics that should serve as a wake-up call if you have been assuming that you will never need paid living assistance.
Long-Term Care Is Expensive
It is not easy to pay for long-term care out of your own pocket unless you have very deep ones. The median cost for a private room in a Warren, NJ area nursing home is over $173,000 annually according to Genworth Financial.
Forty-eight percent of people who need paid long-term care receive the assistance for less than one year. Nineteen percent are in the one-to-two-year range, 21 percent need the care for between two and five years, and 13 percent receive paid care for more than five years.
Medicare Won’t Help
You may not be too concerned about the prices when you first hear about them because you are going to qualify for Medicare as a senior citizen. In fact, Medicare does not cover custodial care, so this is not the answer.
Medicaid Will Cover Long-Term Care
Medicaid is a need-based, jointly administered federal/state government health insurance program that will cover long-term custodial care. Because it is for people with financial need, there is a $2,000 asset limit.
Everything that you own does not count when Medicaid is evaluating your eligibility status, and provisions are made for a healthy spouse. Your home is not a countable asset as long as the equity in the home does not exceed $1.071 million.
Wedding rings, engagement rings, and heirloom jewelry are exempt along with one motor vehicle that is used for transportation purposes. The items that you have around your house and your personal belongings are not considered to be countable assets.
With regard to life insurance, you can have unlimited term life because it has no cash value. Up to $1,500 of whole life insurance is permitted, and you can have this much saved for burial or cremation expenses.
When a healthy spouse is living independently while their spouse is entering a nursing home, the independent spouse can receive a Community Spouse Resource Allowance. This is half of the countable assets up to a limit that is currently $154,140.
There is also a $30,828 minimum allowance, and a healthy spouse can receive an additional Monthly Maintenance Needs Allowance. This gives the healthy spouse the ability to accept income that is earmarked for the institutionalized spouse.
Under other circumstances, it would be used to defray the cost of the care that is being received. The maximum Monthly Maintenance Needs Allowance in New Jersey this year is $3,853.50, and the minimum is $2,465.
There’s a Five-Year Look-Back Period
You can give countable assets to your loved ones to gain eligibility, but you have to act in advance because all divestitures must be completed at least five years before you apply.
If you are relying on income that is generated by your assets, this may be a problem. As a response, you can use the resources to fund an irrevocable, income only Medicaid trust.
While you are living independently, you could accept distributions of the trust’s earnings, but you would surrender access to the principal. This can allow you to fund the trust a number of years before you may need to move into a nursing home.
We Are Here to Help!
We can help you develop a plan for aging that culminates in the successful passing of your legacy. If you are ready to get started, you can set up a consultation at our Warren, NJ elder care planning office by calling us at 908-222-8803, and you can use our contact form if you would prefer to send us a message.
- Can I Write My Own Will, or Do I Need an Attorney? - August 15, 2026
- Is There Any Way to Change an Irrevocable Trust? - August 8, 2026
- How Do You Keep Your Estate Plan Flexible? - August 1, 2026
