Legal and Financial Planning for Assisted Living

Legal and Financial Planning for Assisted Living

Families of seniors who choose assisted living need to establish power of attorney and ensure they have adequate funds. These funds can come from several sources, including savings accounts, investment vehicles, and IRAs.

Many families may assume Medicare covers assisted living costs, but that isn’t always the case. Medicare only pays for some custodial care.

Long-Term Care Planning

Having long-term care plans in place will protect family members from financial hardship and help them understand their options for providing care. Long-term care planning is necessary for anyone, but it’s even more essential for older adults who face a debilitating illness or injury. This type of care can be expensive and often not covered by private health insurance or Medicare. Those with little or no assets can depend on government programs like Medicaid to cover costs. Still, many others will need other funding methods, such as personal savings, investments, and income from Social Security and pension benefits.

It’s not the most straightforward topic, but long-term care planning is necessary. Those who delay putting a plan in place risk selling assets or property to pay for their care, causing financial and emotional stress for loved ones. Working with a financial advisor who specializes in long-term care planning can help.

Life Insurance

A variety of public and private sources can cover assisted living costs. Some popular public options include Medicaid and long-term care insurance. Many people moving to an assisted living community like the assisted living in Saint Augustine also use personal savings, investments, Social Security benefits, pension payments, retirement account savings, and inheritance money to pay for their move.

Life insurance can be a valuable asset to help cover the cost of long-term care. Some available policies do not require a medical exam and can cover up to age 85. It is essential to weigh the pros and cons of using life insurance to pay for senior care.

Another option for financing assisted living is accessing home equity. Whether by selling the house or obtaining a reverse mortgage, this is a common way for seniors to pay for senior living. However, this can be risky and should only be done in consultation with a financial advisor.

Medicaid Planning

Assisted living is not covered by private health insurance or Medicare, and many families want to obtain Medicaid coverage for their care. To qualify, a person must have assets below certain limits and meet income requirements.

Families often work with professionals who specialize in this field to ensure eligibility. These individuals can help structure assets, restructure countable assets into exempt ones, and establish trusts to protect a spouse’s resources.

A family may also seek the guidance of a public benefits counselor trained by the state to provide unbiased advice on a case-by-case basis. They can assist with restructuring assets, including joint accounts, to comply with the rules.

Another option is to work with an attorney who specializes in Medicaid planning. These attorneys are very knowledgeable of the laws in their state and can restructure assets using strategies permissible by law to achieve their client’s goals. They typically charge on an hourly basis.

Estate Planning

Reviewing your investments, consolidating your accounts, and updating beneficiary designations are essential. Incorrect information can cause problems for family members at incapacity or death. For example, a joint account with an ex-spouse may complicate public benefits like Medicaid applications.

Estate planning includes creating a will, establishing trusts, and appointing powers of attorney. It also encompasses advanced directives and legal documents dictating your healthcare preferences in case of incapacity.

Elder law is a specialized field that deals with legal devices and strategies to protect your assets and legacy. It’s essential to seek legal advice and become educated about options such as asset protection trusts, which shield your assets from the cost of nursing home care. However, these strategies must be executed at least five years before long-term care is needed, so early planning is vital. Another option is the life estate strategy, which decreases your countable assets to qualify for Medicaid services.

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