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Baby Boomers: Can You Afford Nursing Home Care?

According to the U.S. Census Bureau, Pennsylvania has the fifth largest number of baby boomer residents. In fact, as of 2015, nearly 20 percent of the state's population was age 65 and older. For these individuals and their family members, it's important to take steps to prepare and plan for the next 10, 20 or more years.

Many baby boomers are concerned about the rising costs of healthcare and long-term care and may question their ability to afford to live out their golden years comfortably while also providing financially for a spouse or leaving a legacy to heirs. Thankfully, there are ways to do both and an estate planning and elder law attorney can provide advice and assistance on how to achieve these and other long-term goals.

Planning For Long-term Care Costs

Most Americans have concerns about the rising costs associated with long-term care. However, for individuals who are nearing or in retirement, such concerns are more urgent. The U.S. Department of Health estimates that 70 percent of individuals age 65 and older will require some type of long-term care assistance and the related monthly costs can quickly climb to total $10,000 or more.

For the vast majority of baby boomers in Pennsylvania, these costs simply aren't affordable. In cases where an individual can afford to pay for nursing home care out-of-pocket, a spouse and other surviving heirs would likely be left with nothing.

Medicaid Planning

Medicaid is a joint federal and state program that provides free or low-cost healthcare to qualifying individuals. Medicaid eligibility is based on need and specific rules and requirements can vary widely from state to state and are constantly changing.

Unlike Medicare, Medicaid funds can be used to pay for assisted living and nursing home care costs, which makes the program an attractive option for funding long-term care needs. To learn more about how to qualify, it's important to consult with an attorney who can provide more information and advice about Medicaid and long-term care planning tactics including:

  • Spend downs
  • Asset protection for non-Medicaid receiving spouse
  • Income limits
  • Asset protection trusts
  • Asset transfers
  • Annuities
  • Caregiver agreements

Like many things in life, it's important to start planning and preparing sooner rather than later. This is especially true when it comes to Medicaid planning as asset protection measures must be taken years in advance of when you may actually need to move into an assisted living or nursing home facility.

The Medicaid qualification process includes a five-year look back period. This means that any asset transfers or protection activities that occurred within the five year timeframe prior to an individual's application date are subject to scrutiny and can result in penalties and a denial of benefits.

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