Today, the average American is expected to live until they are more than 78 years old. If you’re a woman, you’re likely to live into your 80s.
Our increasingly long lives come with a price, though. As we get older, it becomes more and more likely that we’ll need some form of long-term care, and this care can create an enormous financial burden for individuals and families who aren’t prepared.
Fortunately, thoughtful and thorough estate planning can make the costs of long-term care more manageable. In this article, we’ll talk about how you can approach long-term care with a practical mindset and account for the costs of this care when you create your estate plan.
Most Seniors Will Need Some Form of Long-Term Care
According to the 2012 United States of Aging Survey from AARP, about 90% of seniors plan on remaining in their current homes as they age. In addition, 85% of seniors said they believed their homes wouldn’t require any significant modifications to accommodate the physical changes that come with aging.
Unfortunately, these beliefs clash with the facts. AARP estimates that 52% of all seniors will need long-term care services for at least two years during their lifetimes. And statistics show that in 2013 alone, the United States spent $339 billion on long-term care for seniors, with private sources (meaning individuals and families) bearing $97 billion of that cost.
While you may want to stay at home and maintain your independence as long as you can, it’s important to acknowledge that you’ll probably need assistance with household chores, self-care, and other tasks as you age. And if you have a family history of serious health conditions like Alzheimer’s disease, you’re likely to require more intensive care. The costs associated with this care can add up quickly, which is why it’s important to start planning around them as soon as you can.
Help Control Your Long-Term Care with Durable Health Care Powers of Attorney and Do-Not-Resuscitate Orders
You might have strong opinions about your end-of-life care. However, those convictions might not matter if you become incapacitated and you haven’t communicated your wishes to your loved ones. If you don’t have a patient advocate, your family will probably have to make decisions about your care through consensus. And uncertainty about your wishes or disagreements about the best course of action can lead to unwanted care, delays, and conflict.
RELATED ARTICLE: Why You Need a Durable Health Care Power of Attorney
Fortunately, you can help prevent these types of conflicts by creating a durable health care power of attorney. A power of attorney appoints someone as your patient advocate, giving them authority over your health care decisions when you’re unable to make decisions yourself. The power of attorney document can also outline your health care priorities and wishes. For example, you can outline your stance on life-sustaining measures like feeding tubes and ventilators.
If you don’t want to receive emergency life-reviving treatments like defibrillation, you should also complete a do-not-resuscitate order. This document instructs medical professionals, whether in a hospital or elsewhere, to withhold CPR or defibrillation treatments.
However, before you sign a health care power of attorney or a do-not-resuscitate order, you should think through your health care priorities and discuss them with an expert. The experienced estate planning attorneys at Phillips & Santana can help you create a plan and then draft documents that outline your long-term care goals and empower an advocate to make decisions on your behalf.
How Will You Pay for Your Long-Term Care?
Many families are surprised to find out that Medicare doesn’t pay for most long-term care expenses. This means that unless you have very limited financial resources and qualify for Medicaid, you’ll have to pay for some or all of your long-term care expenses.
Options that can help pay for long-term care expenses include:
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Medicare
Medicare will pay for some hospital costs and up to 100 days of skilled nursing care after an inpatient hospitalization. However, Medicare won’t pay for custodial care, which means help with daily activities like eating, dressing, and using the bathroom. Many families use Medicare’s 100 days of nursing care as a stopgap while they sort out their loved one’s finances and come up with a comprehensive plan to pay for long-term care.
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Medicaid
Medicaid is a state-funded health care program for low-income residents. Unlike Medicare, it does cover many long-term care costs. However, if you have significant savings or other financial resources at your disposal, you might not qualify for Medicaid.
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Program of All-Inclusive Care for Seniors (PACE)
PACE programs coordinate and pay for eligible seniors’ long-term care costs. You must meet certain eligibility requirements, and you might have to pay a premium. Low-income seniors who qualify for Medicaid don’t have to pay premiums for PACE services. While PACE will cover the costs of long-term care at a nursing facility, 90% of PACE participants live at home.
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Veterans’ Administration (VA)
If you’re a veteran of the U.S. Armed Services, you might qualify for VA benefits. The VA operates facilities that provided nursing services and long-term care for disabled veterans. Demand for the spaces in these facilities is high, however, and most seniors have to spend time on a waitlist before they can get into a VA nursing home.
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Insurance
Some insurance policies will offset or even completely cover the costs of long-term care. These long-term care policies usually cover nursing home care, home health care, and other services. Alternatively, some life insurance policies will let you take advances to cover the costs associated with long-term care.
However, before you purchase one of these expensive policies, make sure you read the terms and conditions very carefully. You should understand exactly what the plan covers, when you can access its benefits, and how much you will pay for the coverage. If you need help assessing a long-term care policy or life insurance plan, contact Phillips & Santana for assistance. We can help you evaluate your insurance options and talk to you about other estate planning alternatives that might be more practical and cost-effective.
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Asset Protection Trusts
An asset protection trust is an irrevocable trust that can protect your assets and allow you to qualify for Medicaid. Under current restrictions, you must create your trust at least 60 days before you apply for Medicaid.
Creating an asset protection trust is a highly technical process, and one mistake could result in you having to reduce your assets significantly before you can qualify for Medicaid. Before you attempt to create your own trust or apply for Medicaid, contact the estate planning team at Phillips & Santana for help and advice.
Regardless of which option you choose, it’s a good idea to discuss your estate plan and financial arrangements with your loved ones. Making your family members aware of your long-term care plans can help ease their worries and make sure they’re on the same page when it comes to planning for long-term care.
RELATED ARTICLE: How Do I Explain My Estate Plan to My Loved Ones?
Law Offices of Kari Santana: Helping West Michigan Families and Individuals Plan for Long-Term Care
At the Law Offices of Kari Santana, we help our clients craft comprehensive and practical estate plans that account for long-term care. We can help you understand your options, including asset protection trusts, insurance, and health care powers of attorney. To get help today, contact us online or call us at 616-717-5759 and schedule your free, no-risk initial consultation.
References
Kochanek, K., Murphy, S., Xu, J., & Arias, E. (2017, December). Mortality in the United States, 2016 (Data brief no. 293). National Center for Health Statistics. Retrieved from https://www.cdc.gov/nchs/data/databriefs/db293.pdf
AARP. (2012). The United States of Aging Survey. Washington, D.C.: AARP. Retrieved from https://www.aarp.org/content/dam/aarp/livable-communities/learn/research/the-united-states-of-aging-survey-2012-aarp.pdf
Nguyen, V. (2017, March). Fact sheet: Long-term support and services. Washington, D.C.: AARP Public Policy Institute. Retrieved from https://www.aarp.org/content/dam/aarp/ppi/2017-01/Fact%20Sheet%20Long-Term%20Support%20and%20Services.pdf
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.