This is a heart-breaking challenge for spouses and adult children. Planning for long term care at the same time as planning for family members with special needs can be overwhelming.
For one family, an adult child is trying to figure out how his mother and non-working siblings will have enough money to live on. His father, 82, was diagnosed with Alzheimer’s. For now, his mother, 78, is able to be his caretaker, but that will change over time. In addition, his two siblings have mental health issues and cannot work. His parents do have long term care insurance in place, and $1 million in retirement funds. Even if they set up a trust fund for his non-working siblings, will they have enough money to care for everyone?
nj.com’s recent article, “How to help Mom when Dad has Alzheimer's,” advises that those in this or similar situations can benefit from meeting with an elder law attorney about special needs trusts and other benefits planning.
In many states, the average daily cost of nursing home care is more than $450. Money from a long-term care policy can help in stretching other available resources to privately pay for long-term care if necessary. Medicaid might also come into play.
Medicaid is a needs-based program which has income and asset limitations that are applicable before an individual can qualify for assistance. There’s a penalty on any transfers made within five years of applying for Medicaid. The penalty is the number of months that a person will be ineligible for the program. The penalty period begins to run only after an individual enters a nursing home and would otherwise be eligible for Medicaid—not at the time of the transfer. During the penalty period, Medicaid won’t pay for the nursing home. The senior is on his or her own, and private funds must be used.
If gifts or sales take place for less than fair market value within five years of applying for Medicaid, there will be a penalty. Families planning for the future need to understand the consequences of any financial transactions made within that five year look back period, and whether or not they may be incurring a penalty. If the wrong decisions are made, they could render the person ineligible for Medicaid for a period of time after assets have been spent.
An elder law attorney needs to review the entire picture to protect all of the family members, help navigate the Medicaid application and create a plan for the future.
Reference: nj.com (December 7, 2017) “How to help Mom when Dad has Alzheimer's”