I recently saw two advertisements from companies trying to help people “stop Medicaid from taking your retirement.” The ads paint a frightening picture and offer advice on how to avoid trouble. Typically, when you read between the lines of these advertisements, you see they’re usually advising you to take one or two strategies: develop some kind of trust, or invest in some kind of financial product. I’m not suggesting that these are bad ideas or that the people sending you these advertisements are bad people. I do suggest that the concern for long-term care is not about buying a product. It’s about establishing a strategy for how you wish to age.
When I talk about long-term care, I’m talking about skilled care that is typically provided in a nursing home. Under the right circumstances, it can also be provided in your own home. It involves skilled therapies, case management, and intensive care plans. Long-term care is not routine, day-to-day, outpatient healthcare. Additionally, it costs a lot of money. Unless you are very wealthy or have and maintain high quality long-term care insurance, there is only one way to pay for this type of care: Medicaid. Many people are under the mistaken belief that Medicare (routine government provided health insurance for people over age 65) will pay for all of their healthcare needs, but Medicare will only pay for a short period of skilled care following a hospital stay. It will never be longer than several months, and is typically only a few weeks. After that, Medicare assumes you either no longer need care or that you have some other way to pay for it.
In order to qualify for Medicaid, you can only have a limited amount of property and a limited amount of income. While there is some property that doesn’t count against you (like your home if your spouse is living in it), you typically have to “spend down” your excess property in order to meet eligibility criteria. Many people have heard that Medicaid will “look back” five years from the date on which you apply to see if you gave away any of your property in order to qualify for Medicaid. Often, you will get advice about how to give away property and still manage the five-year look back period.
Don’t let advertisements mislead you. There is a better, more thoughtful way to consider how you will pay the cost of long-term care. First, know what care costs. According to Genworth Financial, Inc., in 2016 the average cost of a semi-private nursing home room was $6,388.00 per month (estimated to be $8,585.00 per month in 2026). The cost of an in-home health aide was $3,813.00 per month (estimated to be $5,124.00 per month in 2026). You will contribute some of your monthly income to your care, so the amount of money you need to come up with will be somewhat lower. Still, most people cannot afford that level of care. How long can you afford to pay for care? How long will you need it?
Know your risks, both financial and biological. Anticipate what your finances will look like at the time you think you may need care. According to the US Department of Health and Human Services, someone turning 65 today has approximately a 70% chance of needing long-term care, and will use that care for three years. Of those people, 35% will get that care in a nursing home. On average, they will be in a nursing home for one year.
So, what is your chance of needing long-term care? Does your family history give you some insight? What care would you predict for yourself based on your own health care history? Most importantly, where do you want to receive long-term care if you need it? Do you have friends or relatives who can provide a safe level of care? Is your home properly planned and accessible so you can “age in place” in your home? These are all questions that can only be answered by looking at you as a human being, not just as an accumulation of your money and property. It requires legal, financial, and geriatric care professionals.
So let’s take another look at the advertisements that I received. Maybe you’ve seen these, too. You may have even attended a seminar or sought professional advice about your planning options. Did they talk to you about care management? Did they talk to you about aging in place? Did they analyze the risks you have for care and the options you have for paying for that care? If the answers to those questions are, “No,” my advice is to engage a professional who will consider these questions as part of a comprehensive plan for your long-term needs.
You need not wait until you’re 65 or older to consider this. You should start planning early and consider how to structure your life for your elder years. For example, my wife and I (in our mid-50s) recently remodeled our kitchen. We made sure there was plenty of room between the cabinets in case one of us ever needed a wheelchair. We placed the appliances low, within reach of a wheelchair. Any professionals with whom you engage for long-term care planning should look comprehensively at your life to determine not only how best to pay for care, but how to best receive that care.