New Yorkers are strong and have learned that a pinch of preparation is worth a pound of cure. This is why many of us want to begin long-term care planning, and one way to do this is through your estate plan.
What is long-term care planning?
The term, long-term care, refers to the supportive services needed when you are disabled, or incur a chronic illness or cognitive impairment. These impairments stop you from doing your normal, daily activities, like eating, dressing, bathing, etc. These services are provided in a nursing home, assisted living facility or in-home with a nurse or other practitioner. Planning for this eventuality is called long-term care planning.
Why do I need to plan?
In a word, cost. According to Genworth’s 2020 Cost of Care Survey, the average annual cost of a nursing home is over $160,000, which is more than most Americans make per year in their prime earning years. This is how, without planning, your long-term care can destroy your savings, assets and your estate plan. And, before you think that Medicare or your private health insurance will cover these costs, they usually only cover for short-term or acute care. They generally do not cover any custodial or ongoing long-term care.
Long-term care insurance policy
If you do long-term care planning earlier in life, the easiest way to ensure your long-term care costs are covered is through a long-term care insurance policy. These policies can pay for the entirety of the costs or a percentage of it. Often, the premiums grow over time to reflect the increased costs, or you can choose a fixed payment amount that has fixed monthly benefit, should you need it. Either way, they are a straightforward way to include long-term care planning in your estate plan.
Planning for Medicaid
If a long-term care insurance policy is unaffordable, which is the case for our older readers, another option is to plan for Medicaid, which does provide for long-term care. However, Medicaid is only available to low-income people and their families.
To qualify in New York, you must meet income and asset limits that will vary depending on your specific circumstances. For example, in New York, for a single person, you cannot have more than $15,900 in countable assets and no more than $50 in monthly income. If you are married it increases to $23,400 and $100, respectively. With an irrevocable trust, you can use your estate plan to meet these limits.