As the population ages, long term health care planning becomes more important. By long term health care, we mean any health care that extends over a long period of time. This can be assisted living, in home health care, care in a nursing home, or group home care.
Not only does long term care mean a loss of personal freedom, but it can create a significant financial burden. Funding of long term care has become more challenging for seniors and their families, as life expectancies have increased and qualifying for government programs has become more restrictive and complex.
Today, there is no bottom line amount of assets that a family needs to pay for long term care for a family member. Some members of the health care profession estimate that a family would need assets of $1.0 million with cost averaging up to $100,000.00 per year. Most families will have to resort to some form of government long term care assistance.
One of the most well-known programs for long term care assistance is Medicaid. Medicaid is a federal program that is administered by the state. Medicaid eligibility depends on your age, residency, amount of your assets and your income. Each state may have different requirements and financial limits. Eligibility standards and regulations for Oregon are contained in ORS §§ 411.400 et. seq. and OAR 410-12-0000 et. seq. The Oregon eligibility manual is available online at http://apps.state.or.us/ct1/EligManual
Oregon provides for certain exemptions for assets to exclude from calculating assets for Medicaid eligibility. In addition, some property is not included, such as unsalable property. Income includes income from all sources, such as social security benefits, pension benefits, interest income and investment income.
If you are not in need of immediate long term care, there are planning options to implement to help you qualify for Medicaid when the need arises. As part of preplanning, a person can spend down certain assets, such as exempt assets, personal service, nursing home care and medical expenses. However, spending down assets can cause a period of ineligibility for benefits. The period of ineligibility for transfers is for transfers made within 60 months of when an individual is otherwise eligible for Medicaid. The penalty is calculated based on a specific formula.
The key to long term care planning is to plan in advance and consider not only eligibility requirements, but tax issues and estate planning concerns. Remember that if you give money to your children, it belongs to them. Your children could lose the money through bankruptcy, divorce or lawsuits.
Consultation with an attorney who specializes in long term care planning is essential because of the complexity of the eligibility requirements, the constant change in the law and regulations, and the devastating effect that failure to plan and comply with the regulations can have on a family for generations.
If you are going to consult with an attorney, the sooner the better. To discuss this complex area of planning, please contact one of our estate planning attorneys.