Long-term care is one of those head-in-the-sand issues we all must confront as we age. It should come as no surprise that 70% of people over age 65 will need some form of long-term care support. Yet few prepare.
Long-term care represents a spectrum of care.
At one end of the spectrum is home care, which can be a limited number of hours for a limited array of services. It also can be full time for those who need a very high level of care and who otherwise would have to be in a skilled nursing facility.
At the other end of that spectrum is a skilled nursing facility, which no one wants.
There are also assisted living facilities and residential care homes, which are typically three- or four-bedroom homes staffed by nonmedical care providers 24 hours a day.
Costs of care
The costs of long-term care can be daunting. At home, it can be modest or it can be sisted living facility can be $4,000 or $10,000 per month, depending on the level of care needed. A skilled nursing facility will cost between $8,000 and $15,000 per month. Inevitably, all of these costs will increase as the demand grows and the supply of caregivers effectively shrinks.
Most of us first pay out of our own pockets – we pay privately. Even if we can afford it, ongoing, relentless monthly payments are difficult to accept. We see our liquidity diminish and sometimes vanish. Some of us, very few, obtain long-term care insurance. The other alternative is an array of government programs that can provide limited home care services and even pay for all or most of the cost of skilled nursing care.
Most significant is Medi-Cal, California’s version of the federal Medicaid program. It is not the case that you must be impoverished before you qualify for Medi-Cal coverage in a skilled nursing facility or for the In Home Support Services program.
The basics of eligibility: For an individual to qualify for Medi-Cal in a skilled nursing facility, he or she can have no more than $2,000 in countable assets. Significantly, neither a residence (of any value) nor retirement accounts count in determining eligibility. If there is a spouse living at home, the spouse can have a minimum of nearly $130,000 and a minimum of more than $3,200 of monthly income without disturbing eligibility.
Without proper planning, family assets, including the house, can be wiped out before qualifying for Medi-Cal. Poor planning also can result in a Medi-Cal reimbursement claim asserted against your residence after your passing.
With proper planning, the residence and most other assets can be protected. California law is extraordinarily liberal or forgiving. Carefully structured plans, which may involve asset transfers or the creation of appropriate trusts, are simply necessary.
Don’t do this at home. Asset protection and Medi-Cal eligibility planning is challenging and requires sophisticated advice. Many facilities do not accept Medi-Cal. Numerous tax challenges arise when such plans are implemented. Be sure to talk with an attorney who understands this area of law, ideally before the long-term care crisis directly affects you.