The Importance of Medicaid Planning as Aging Baby Boomers Need Long-Term Care
By Don Drake, Connelly Law Offices, Ltd.
"Medicaid is a government program that offers health insurance to low-income children, seniors, and people with disabilities. It also provides coverage for nursing home care for eligible recipients," stated Attorney RJ Connelly III, professional fiduciary and Certified Elder Law Attorney (CELA). "In California, the program is called 'Medi-Cal,' in Massachusetts, it is 'MassHealth,' and in Tennessee, it's known as 'TennCare.'"
"Medicaid has become the middle class's go-to nursing home insurance option due to the lack of other public programs to assist with long-term care expenses. It is common for individuals to bear the burden of long-term care expenses out of their own pockets until they meet the eligibility criteria for Medicaid," Attorney Connelly said.
Attorney Connelly noted that while New York State is providing home care to all Medicaid recipients in need, other states are starting to recognize that home care is more cost-effective than nursing home care and are now offering more Medicaid-covered services for those who choose to remain at home.
But the reality is what older Americans fear most is that they may end up in a nursing home. This means a significant loss of personal autonomy and a tremendous financial cost. Careful planning can help ease these concerns.
One Family's Story
Roger and Elizabeth sat in their comfortable home discussing their plans now that the couple had retired. He had worked as a home contractor in Connecticut, and she was a nurse in Rhode Island. They had just returned from a cruise to Alaska and were about to plan another extended vacation, something they had forgone for decades because of their careers. But that could be discussed later as Roger had an appointment with a trainer at the local gym, and Elizabeth was shopping with her daughter at the Casino outlets. They said goodbye to each other and attended to their respective plans.
Later that morning at the gym, Roger received a frantic call from his daughter telling him that mom had collapsed at the mall and was transported to the hospital by the EMTs. Rushing to the emergency room, he discovered she had suffered a massive stroke.
After receiving medical care for several weeks, a social worker at the nursing facility approached Roger about his finances and how he planned to cover the monthly cost of over $8000 for her care. He was taken aback since he hadn't considered this before.
First, he was faced with the terrible news about his wife's illness of over 50 years, and now the loss of the savings and property the two had accumulated during their life together, which both had viewed as an excellent start for a college education for their grandchildren.
In his conversation with the social worker, Roger learned that while they had Medicare, it wouldn't cover care costs. He discovered that Medicaid could pay for care, but he was not eligible due to his assets. This left Roger devastated.
This story happens daily in the country, emphasizing the importance of Medicaid planning, particularly as the baby boomer population reaches retirement.
Looking at Trends
By 2050, the number of older Americans will almost double, and a staggering 25% of the population will be sixty-five or older. It's important to note that from 2011 to 2030, an average of 10,000 people will reach retirement age daily. This demographic shift demands our attention and action to ensure we are prepared to support and care for our aging population.
While retiring may seem appealing, the reality is that as we age, our bodies deteriorate, and health issues increase. Despite living longer, our health may not necessarily improve.
The number of Americans living with chronic conditions is expected to increase by 37% by 2030, totaling almost forty-six million. Additionally, the number of individuals with Alzheimer's disease aged sixty-five and above is projected to rise 30% to 6.7 million by 2025 and triple by 2050.
Although we live longer, medical costs increase, and we spend more time in nursing homes. Without proper planning, our assets can quickly disappear, leaving nothing for our children or grandchildren.
The Costs of Senior Care
Based on the Genworth cost studies cite below, we provide the monthly expenses of senior care for Rhode Island, Massachusetts, and Connecticut residents for 2023. Please keep in mind that these are just annual averages. To see more about your state or more about the costs in southern New England, click here.
The annual cost of nursing care in Rhode Island in a private room this year is $120,450 and for semi-private rooms, $113,150. Annual assisted living costs are $81,915 and in-home homemaker services average $68,640.
The annual cost of nursing care in Massachusetts in a private room this year is $162,425 and for semi-private rooms, $151,475. Annual assisted living costs are $78,000 and in-home homemaker services average $70,928.
The annual cost of nursing care in Connecticut in a private room this year is $182,044 and for semi-private rooms, $165,163. Annual assisted living costs are $61,551 and in-home homemaker services average $62,920.
It is essential to understand what is covered by government programs and how to plan for them should they be needed. Let’s discuss some of this.
It is important to note that Medicare and Medicare Advantage Plans do not cover long-term care, regardless of any supplemental coverage with high premiums. Nursing home care reimbursements are also limited or not covered at all, placing the burden of payment on the individual's assets. It is therefore imperative for individuals to seek protection through Medicaid planning.
As you read earlier, the cost of care is overwhelming. Even if you have significant assets, a lengthy stay in a facility can deplete them quickly, and eventually, you may need Medicaid. What you have acquired through your life should be left to those you love. To make sure this does happen, doing a Medicaid Plan in advance can accomplish this.
Plan Before It Is Needed
Medicaid requires a "five-year look back" and disqualifies individuals with asset transfers within that period prior to applying for coverage. Protecting assets in emergencies is possible, but planning is best.
Long-term care is a costly process, and chances are most of us will be involved with this choice based on future projections, so Medicaid planning offers a more affordable alternative solution. Securing professional legal oversight when planning for Medicaid acceptance is beneficial for the following reasons:
Ensure the appropriate documents are gathered and the paperwork is completed correctly to avoid denial of benefits.
To reduce stress levels and delays in approval, the process can proceed quickly and smoothly.
To protect the financial security of the spouse.
To keep limited financial assets from being used improperly and resulting in additional delays.
As you can well understand from the costs cited earlier and the likelihood that Americans will need these services more in the future, Medicaid planning is essential. Connelly Law can help you with Medicaid Planning if or when needed. Our office is happy to answer any questions regarding this important matter. Call us at 1-401-724-9400.
Our upcoming blog post delves into Medicaid Crisis planning, which is crucial for protecting your family from potential financial chaos if an unexpected illness or injury necessitates long-term care placement and Medicaid Planning is not in place.