If you have elderly parents, or even if you’re looking for yourself, you already know there are many hard decisions to make when it comes to growing older. No one likes to think about deteriorating health and the possibility of needing special assistance, or long-term care, as they age. Figuring out the financial implications can be even harder.
Long-term care costs can be staggering. Compared to acute care, which is often covered by Medicare/Medicaid and insurance, long-term care occurs when a condition is considered chronic and the individual will continue at the same level of assistance needed indefinitely. Since it’s estimated that 7 out of 10 people will require long-term care at some point in their lifetime, planning for the costs is an important and necessary step in the estate planning process.
Costs of Long Term Care
The cost of long-term care varies on many factors including:
- Geographic location
- Level of care required
- Care setting (home, nursing home, or assisted living)
The median annual cost for an assisted living facility is over $48,000. The median annual cost for a private room in a nursing home is over $102,000. These numbers continue to rise year after year.
Paying with Medicare or Medicaid
While Medicare will cover doctor visits, hospital stays, and short-term skilled nursing facility stays, it will only cover the cost for the first 20 days. Based on the plan, a portion of the cost may be partially covered for the next 80. After 100 days, the responsibility of covering costs relies entirely on the individual. While it is possible to cover more with a supplemental plan, strict requirements will have to be met in order to qualify.
Paying with Retirement Accounts
If you’re considering paying for long-term care out of a pre-tax retirement account like a 401k or IRA, it’s important to consider the potential tax implications. Withdrawing the amount from your retirement accounts could push you into a higher tax bracket. As tax rates fluctuate, it could cost more in taxes during your retirement years than you would have paid with a non-tax advantaged account. Additionally, the pure costs of long-term care could drain your accounts faster than you had initially planned.
Bridging Long-Term Care with Estate Planning
For those who wish to age and be cared for as comfortably as possible, while minimizing the negative impact on their families, planning in advance in combination with your estate planning attorney and financial advisor can help ensure a proper long-term care planning process is instated.
At Smith Barid, we develop a comprehensive Long Term Care Planning Report. Just like you wouldn’t ask a doctor to diagnose you without a thorough examination, likewise, our elder law attorneys take an in-depth look at your situation. To navigate the complicated landscape of long term care planning we will need to know:
- What is the current medical situation?
- Has there been a diagnosis of dementia?
- What income is there to help cover costs?
- Are there sufficient assets to cover future costs of living and costs of care?
Our attorneys will take a close look at each individual source of income, insurance policy, and other assets. Similar to how a doctor examines you physically, looks over your medical records, and orders some tests before they make a diagnosis, we will closely examine your situation before we propose a solution.
Once we have had the opportunity to review all of the relevant information, we will create a plan customized to you, your family, and your situation to qualify you as quickly as possible for Medicaid or Veterans Pension (Aid and Attendance) benefits.
Because we believe in tailoring long-term care plans to the individual, but as an affordable option, we offer fixed-priced long-term care and estate planning processes. Schedule an appointment today or call us at 912-244-7868 to learn more.