At What Age Should I Consider Long Term Care Planning?

by: Begley Admin

While everyone’s situation is different, in general, once you reach 50, you should start to think about long term care planning. According to recent studies, approximately 43 percent of all people will need long-term care at some point in their lives. The cost of this care in New Jersey and Pennsylvania is high, and rising at an alarming rate. For example, costs of care can range from $20 – $25 per hour or more for in-home care, and between $8,000 – $12,000 per month for nursing home care.

Medicare does not cover most long term care costs, meaning those in need of such care must either pay for it out-of-pocket, or rely on Medicaid. For families who have the assets, they must pay out-of-pocket for these expenses, unless they have a long-term care insurance policy, which is rare. Alternatively, families can employ a Medicaid planning strategy to limit the amount they need to pay before qualifying for Medicaid.

Most families will rely on Medicaid to cover the costs of long term care. However, because Medicaid is an income-based program, that imposes strict income and assets limits. However, when someone applies for Medicaid, Medicaid will review the last five years of transfers. If there are any prohibited transfers, this will delay eligibility, requiring they pay out-of-pocket until they are approved.

Given the five-year lookback period, it is imperative that families considering the need for long term care plan well in advance. If you wait too long, you may encounter a situation where you cannot legally transfer your assets without incurring an eligibility penalty.

With enough time, there are effective Medicaid planning strategies families can use to limit the amount of long term care expenses they are responsible for. However, even those with ample time to plan should meet with an experienced New Jersey estate planning lawyer.

For example, one of the more common Medicaid planning mistakes involves transferring a home to a loved one, usually a child, outside of the five-year lookback period. While, on its face, this may seem like a good way to protect a home from the Medicaid spend-down provision, families can encounter a variety of problems. For example, if the family member receiving the home owes money to creditors, they could come after the home.

Additionally, there are several tax repercussions to transferring a home to a family member. For example, if the family member needs to sell the home after the transfer, they may lose out on the primary residence exclusion, requiring they pay more taxes than would otherwise be necessary.

And finally, parents lose control over the home once it’s transferred to someone else. Thus, the person receiving the home could sell it without permission, or take out a mortgage on the home for their own benefit.

Of course, there are many other Medicaid planning strategies that do not incur these risks, and those who are approaching 50 should consider meeting with a New Jersey estate planning lawyer to discuss their options.

If you have not yet met with a New Jersey Medicaid planning attorney to discuss how you will pay for long term care should the need arise, now is the time to do so. At the Begley Law Group, our dedicated team of estate planning attorneys will create a custom-tailored plan designed specifically for your family’s unique needs. Having served clients across New Jersey and Southeastern Pennsylvania for the past 80 years, our strength comes from our experience. To learn more, call 856-235-8501, or toll-free at 800-533-7227. You can also reach out to us through our online form.