Utah Elder Law & Long-Term Care Planning
Elder law is another aspect of estate planning, focusing primarily on the needs of families and individuals as they age. We assist clients with the many legal issues of aging, including guardianships, health care documents, estate planning, planning for long-term care, Medicare and Utah Medicaid eligiblity.
Clients are frequently confused over the differences between Medicare and Medicaid. Though their names are very similar, the programs are quite different. Medicare is an entitlement program, a federal health insurance program in which most people enroll when they turn 65 years old. There are no financial qualification rules. Medicare has two primary parts: Part A and Part B.
Medicare Part A covers in-hospital care, extended care after a hospital stay, some home health care services, and hospice services. The rules for nursing home coverage are very strict and, in fact, Medicare pays for less than 9 percent of nursing home care in this country.
Medicaid is a joint federal-state program. Subject to certain federal requirements, each state implements its own regulations on how the program is managed. Medicaid is not an entitlement program like Medicare, but rather a form of welfare. Medicaid eligibility is determined after the proper application is submitted to the state. There are many Medicaid insurance programs available in Utah, from basic medical coverage to nursing home programs.
Long-Term Care Planning
The Challenge of Paying for Nursing Home Care
Did you know that, if you are single, the odds are 50 percent that you will need long-term care? If you are age 65 and married, the odds are 75 percent that you or your spouse will need long-term care. The average nursing home stay, by the way, is 2.5 years.
Long-term care is expensive. Nationally speaking, a year in a nursing home is estimated to cost an average of $76,460. Is it any wonder that 50 percent of mature couples become impoverished within a year after either spouse enters a nursing home? The number jumps to 70 percent for widowed or single persons.
By the way, forget about Medicare paying for your chronic long-term care needs. Medicare only pays for acute nursing home care for up to 100 days, and even then your eligibility and payments are subject to very strict requirements. Remember, too, Medigap (i.e., Medicare Supplement) policies typically will not pay for your chronic long-term care needs either.
What about giving away your assets to your loved ones to qualify for Medicaid (i.e., welfare)? Legally speaking, any transfer of assets for less than fair market value (i.e., a gift) may subject you to a lengthy period of ineligibility under the complex and confusing web of Medicaid Regulations. And transferring assets can be hazardous for other reasons. Consider this: What would happen if your transfer of assets to loved ones rendered you ineligible for Medicaid assistance, AND then those loved ones subsequently lost the assets through squandering, divorces, lawsuits or bankruptcies? Not good.
Nearly Half of Senior Citizens Will Require Long-Term Nursing Care
The key to proper long-term care planning is to plan now rather than to react later. There are numerous legitimate strategies to preserve more of your assets, but only if do not procrastinate until it is too late.
One of the best strategies may be to insure your financial security through proper Long-Term Care Insurance (LTCI). Again, don’t wait too late to apply, because your health actually purchases LTCI, your money just pays the premiums. [That is why my wife and I purchased our LTCI before we were age 50!]
No one relishes the notion of paying insurance premiums of any kind. After all, you can pay and pay and pay... and never collect on a claim. If you are fortunate.
The purpose of insurance is to transfer a risk that you can afford (i.e., the payment of a premium with no guarantee of its return) to cover a risk you cannot afford. For example, what homeowner does not insure their personal residence from damage due to a fire? Or, what automobile owner does not insure their auto from damage due to a collision? Consider this: The odds of a major fire insurance claim are about one in 88, with an average claim of $2,000. The odds of an auto insurance claim are about one in 47, with an average claim of $8,000.
Against this backdrop, why would any responsible, mature American (i.e., age 65 or older) not insure against the financial risk of requiring long-term care at some point? Consider this: The odds are nearly one in two that a seasoned citizen will need long-term care for about 2.5 years at an average cost of $76,460 in 2008, making the average claim in excess of $200,000.
Long-Term Care Insurance
Fortunately, an appropriate Long-Term Care Insurance (LTCI) policy can be designed to fit almost any budget. Most LTCI policies share some common features you should know, to include the following:
• Benefit Amount: How much and how long will the policy pay?
• Benefit Triggers: When will the policy pay benefits?
• Inflation Protection: Will the purchasing power of the Benefit Amount increase?
• Level of Care: Are Home, Custodial and Intermediate Care covered, along with Skilled Nursing Care?
Caveat Emptor – Buyer Beware Before Buying Long Term Care Insurance
Caveat Emptor! is Latin for Let the Buyer Beware. With all of the companies selling LTCI, this in an appropriate warning. When shopping for an appropriate LTCI policy, remember that financial strength is the key consideration. As with any form of insurance, the policy is only as solid as the ability of the insurance company to pay your claim. Check of the financial strength and reputation of the insurance company before you sign on the dotted line.
If you would like advice and counsel regarding your Long-Term Care options, to include evaluation of any LTCI policy before you sign the application, give us a call. We are here to help.
Salt Lake City Estate Planning Attorney Jason Hunter assists clients with Estate Planning, Wills, Trusts, Revocable Living Trusts, Charitable Planning, Utah Probate and Estate Administration, Asset Protection, Business Succession Planning, Elder Law and Long-Term Care Planning, Special Needs, and Tax and Corporate Planning in the greater Salt Lake City and Ogden, Utah areas as well as St. George, Cedar City, Kanab, Park City, Provo, Orem, and Logan, in addition to clients living near his offices in Salt Lake, Davis, Utah, and Weber Counties.
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