How to Plan for Nursing Home Costs

There’s a bumper sticker that says, “Be nice to your kids—they’ll be picking out your nursing home.” But while the saying might be good for a laugh, your monthly nursing home bill sure won’t be. AARP has estimated that 35% of people who are aged 65 can expect to receive some nursing home care during their lifetime. An estimated 18% will spend at least one year in a nursing home, and about 5% of seniors will be in a nursing home for at least five years. How much does a nursing home cost? It depends where you live, but the average nursing home cost around Dayton, Ohio is about $95,000 for a semi-private room,, and about $116,000 for a private room.

Remember: those are current costs. If you won’t need nursing home care for decades, you can expect your actual expenses to be much higher. So, how do you plan for nursing home costs? And how do you protect your assets from the nursing home? Fortunately, there are a number of strategies you can use for long-term care planning (and simply hoping you won’t need care isn’t one of them).

Medicaid and Nursing Homes

If you looked at the average cost of nursing home care in Ohio and thought, “Who can afford to pay for that?” you’re not alone. The fact is that nursing home costs can quickly deplete a nest egg you have been carefully building for your whole adult life. You probably intended those funds to care for your family, and you likely don’t want to hand them over to a nursing home.

The good news is that most people in nursing homes get help from Medicaid to pay their expenses. The bad news is that in order to qualify for Medicaid, you can only have a limited amount of assets and income.

What’s more, you can’t simply transfer assets to your loved ones in order to meet income and asset thresholds. When you apply for Medicaid assistance, the program “looks back” five years at all of your transfers of assets. If you transferred an asset for less than its fair market value, your eligibility for Medicaid could be delayed or jeopardized.

That’s why it makes sense to plan ahead for possible nursing home costs, ideally many years before you expect you might need them.

Developing a Plan to Pay for Nursing Home Costs

It can be overwhelming to try to plan for nursing home costs, protect your family, and safeguard your assets. Fortunately, you don’t need to go it alone. An experienced Ohio elder law attorney can help you evaluate your needs and those of your family and identify your Medicaid planning and asset protection options.

Remember that the Medicaid “look back” rules are not intended to impoverish you, but to prevent fraud on the system. Medicaid planning is not a way to “game the system,” but to allow you to access the benefits you are entitled to while still providing for your family.

Some of the options available to you include:

• Medicaid Asset Protection Trusts, which can protect your family home and other assets not only from the nursing home, but from divorce and other creditors as well. A MAPT may also provide tax benefits.
• Medicaid-compliant annuities:
• Qualified Income Trusts;
• Legally transferring your home to an adult child who has cared for you using the Medicaid child caretaker exception;
• Long-term care insurance;
• Veterans’ benefits such as Aid and Attendance benefits.

Depending on your circumstances, you may be able to use some or all of these tools to protect your assets from the nursing home. Your estate planning and elder law attorney can help you identify which long-term planning options you are eligible for, or to suggest other actions you can take to plan, such as purchasing long-term care insurance while you are still healthy.

What Happens When There’s No Time to Plan for Nursing Home Costs?

For the reasons we’ve discussed above, planning ahead for nursing home costs makes sense. That said, the vast majority of people don’t do it. They may assume that they will never need a nursing home, or that there is plenty of time left to plan—until suddenly, there isn’t.

What if you have a loved one who is suddenly in need of nursing home care, but they haven’t planned ahead to manage costs? While you might be facing some challenging decisions, that doesn’t mean that there is nothing that can be done to protect at least some assets. Many families face unforeseen events and catastrophic health crises that require a rapid response. The sooner you act to do some nursing home crisis planning, the better off your loved one and family will be.

Whether you are looking to plan ahead for the future, or seeking guidance to manage a current crisis, we invite you to contact Gudorf Law for help with your planning needs.