Proper Medicaid Planning Is Essential for Long-Term Care
The National Institute on Aging reports that roughly 70 percent of American over the age of 65 will need some type of long-term care. If that isn’t shocking enough, the NIA reports that over 40 percent of Americans will need some type of nursing home care at some point in their life. You may be thinking, “What’s the big deal?” Well, considering the fact that the annual cost of long-term care at a nursing home is over $100,000 per year, the “big deal” is financial – the cost of care could quickly wipe out your savings leaving you with very little, or nothing, to pass on to your loved ones.
Typically, people pay for long-term nursing home care through one, or a combination, of these methods:
(i) long-term care insurance;
(ii) retirement funds; and/or
(iii) Medicaid.
In my experience, I have found that better results are achieved for the family if they think through the issues BEFORE a catastrophic illness strikes. Unfortunately, most families react after the fact and must resort to crisis planning which in turn produces negative results. For example, adult children will receive a call that Mom or Dad is going into the nursing home. It is at that point that reality strikes and the family tries to figure out their options. The legal field calls this “crisis planning” and hefty legal fees are incurred by the family at this point mainly because they have waited to long to seek counsel. The family may have to spend down practically all of mom or dad’s assets to qualify for Medicaid (otherwise known as government financial assistance). Extreme financial and legal decisions are made in a short period of time during a very difficult time for the family. Assuming you do overcome the hurdle of qualifying for Medicaid, how good are the results really? Mom or dad may get into a “Medicaid” approved facility where they get a Medicaid bed and your guess is as good as mine regarding the type of care mom or dad will receive. It is a sad result and it happens routinely.
As I stated above, better results can be achieved by taking a little time now to think through the issues with competent advisors. We have found that collaboration between the family, a financial advisor and estate planning attorney when thinking through retirement issues produces better results (Some attorneys call themselves “elder law” attorneys. I wouldn’t get hung up on the distinction, just get with an attorney who knows the laws).
Better results in my mind mean:
(i) not having to spend down all of your assets;
(ii) not having to make rash financial decisions in a stressful time;
(iii) having the option of having a qualified professional come to your own home and taking care of you or going to a care facility of your choice not the government’s choice;
(iv) having enough money for you and your spouse to live on;
(v) adult children not having to take care of mom or dad all the time; and
(vi) having a plan where all parties involved know their role and what to do.
The financial industry has created a host of financial products to meet long-term care needs but, in my experience, these options become more expensive and limited the longer you wait. The one that’s right for you and your family depends on your situation.
In my law practice, I try to motivate my clients to think through the issues sooner rather than later because of my dad’s own battle with Alzheimer’s. He did not think through the issues with his financial advisor and his attorney never even spoke to his financial advisor. He was given some legal documents that were useless because they were boilerplate and did not address his real issues.
When people are shopping for an estate planning attorney on price of the documents, I cringe because I can see the same old routine happening again. It is a common practice and I can’t really fault this approach because that is what has been taught to the public. “I have my Will and my Power of Attorney done so I am all set.” Or “how much do you charge for a Will or Trust”? If that is your question to the attorney and if the attorney actually answers that before they meet you and understand your situation then what you normally get is a “document”. The document doesn’t do the work. In my experience, the family needs a plan. A plan requires a thorough understanding of your family situation and counselling. The documents are just a byproduct and people all are shopping on the price of the document missing the whole point. The stakes are high as I have seen them first hand.
It is important to ask the right questions when discussing estate planning with your attorney so that you know all the bases are covered. In my practice all clients are required to go through an initial client orientation that lists many of the relevant issues and questions that families should be considering when going through this process. It makes the rest of the planning go smoother because then the family can decide which options are best for them.