The statistics are clear that a significant portion of the population will end up needing some form of long-term care at some point of their life. That can be stressful to think about from a physical and emotional perspective, but it can also be a major financial consideration. This is because a nursing home stay can cost as much as over $100,000 per year. Even if you’ve worked hard to accumulate a significant amount of wealth, it can evaporate seemingly overnight if you don’t take precautions to help you cover potential nursing home care costs.
Your options for covering nursing home expenses
As frightening as those costs may be, you should take comfort in knowing that there are steps that you can take to protect your financial interests. Here are some of them:
- MassHealth planning: Your best option may be to try to qualify for Medicaid, which is lumped into the state’s MassHealth program. In order to do so, you’re going to have to reduce your income and your assets to meet eligibility requirements. How do you do this?
One way to do this is to slowly gift away your assets. You’re allowed to give away a significant amount of money to individuals each year without facing tax consequences. This can be a good way to effectuate what would otherwise be part of your estate plan and it allows you to enjoy seeing your loved ones use those funds. Just keep in mind that there’s a lookback period for Medicaid eligibility, so you’ll want to start this planning sooner rather than later.
Another way you can try to qualify for MassHealth is by using trusts. There are a number of these that you might be able to use to protect your assets, including your home, while also reducing your assets to the point that you qualify for MassHealth. An irrevocable trust is a common option here.
- Long-term care insurance: This is a basic policy that you can purchase to help cover your expenses, should they arise. You can choose the amount of coverage that you want; you’ll just want to make sure that you stay up-to-date on your premiums so that you’re not denied benefits when you need them.
- Purchasing an annuity: An annuity is a financial arrangement where you pay a lump sum to a company in exchange for periodic, usually monthly, payments. By purchasing an annuity, you immediately reduce your assets while ensuring that a healthy family member, typically a spouse, receives the annuity payments. This is a good way to protect your assets, but this option is usually used by those who are in an emergent situation and haven’t taken other steps to protect their assets from the implications of long-term care.
As you can see, you have options when it comes to finding a way to cover your potential nursing home costs. And there may be other avenues that you can explore that aren’t discussed above. We know it can be stressful to think about these matters, but our clients tend to feel a sense of relief once they’re able to implement a plan that protects them, their potential care needs and their financial well-being.
So, if you’d like to learn more about what you can do to get a handle on these matters, please consider reaching out to an elder law team that can effectively guide you toward a plan that’s right for you.