Long-term care planning is a part of every state plan, or at least it should be. This is because the cost of long-term care can be daunting. Indeed, the average yearly cost of long-term services is $138,000, and most people have to pay half. Some, about 20%, pay over $100,000 a year out of pocket. This is why it is so important to include long-term care planning in an estate plan.
Medicare and Medicaid
First, Medicare does not typically cover long-term care, and it only covers a small amount of short-term care, if it is medically necessary. Medicaid does, however, cover long-term care, as long as one meets low-income requirements. Indeed, Medicaid actually covers about 60% of everyone in nursing homes.
Spending down to qualify for Medicaid
The income requirement for Medicaid is strict, so this means many have to spend down their assets and income to qualify. Otherwise, they will have to deplete their estate to pay for their long-term care. This is a huge part of estate planning through creating a trust to move those assets and income, especially since Medicaid allows states to recoup Medicaid costs by selling one’s home after death.
Veterans Health Administration
The VA may also be able to help cover long-term care costs. In fact, in 2019 alone, they spent nearly $7 billion on those costs. Signing up for these benefits are done directly through VA Health, and like Medicaid, there are several requirements that must be met.
Another thing that should be utilized in an estate plan is long-term care insurance. This can help pay for costs when long-term care is needed. And, if these programs are attained when one is younger, the premiums are often significantly lower. Plus, premiums can be tax deductible and qualify as a medical expense, and if one purchases a partnership policy, they may qualify for Medicaid benefits without spending down. For those in the New York, New York, metro area be sure to make these plans now before they are needed.