What Are My Elder Care Options and How Do I Afford Them?

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July 12, 2023 •  The Estate & Elder Law Center of Southside Virginia, PLLC
The time to start researching elder care facilities, experts recommend, is before you need one. There are numerous options for elder care, and you don’t want to be caught flat-footed in the event of an unexpected health crisis. Those sudden situations can force you to make a quick decision without the knowledge to make an informed choice.
Robert W. Haley, managing lawyer
Robert W. Haley
Certified Elder Law Attorney® Robert W. Haley brings over 27 years of legal expertise and knowledge to his firm, which concentrates solely on the areas of elder law, estate planning (Last Will & Testaments, Durable Powers of Attorney, Health Care Powers of Attorney, Living Wills, Trusts, etc.,.) Asset Protection/Medicaid Planning and fiduciary services. For many years, Robert practiced in real estate law, and in general practice, but decided to narrow his focus to elder law and estate planning when he realized the tremendous need for proper planning to be filled in Southside Virginia.

US News’ recent article entitled “Understanding the Different Elder Care Options,” says that there are several different types of long-term care facilities, including these:

Home-Based Care. Many Lynchburg elders would like to stay in their homes for as long as possible, which is super if they have enough support from adult children or other friends and relatives to help with their needs. If they don’t have this support network, they may need to hire a home care agency or an eldercare aide, which comes at a cost. Some states have a waiting list, and in many instances, the hours approved by Medicaid are insufficient for proper care. Medicare typically doesn’t cover home care at all. Therefore, you must pay out of pocket or with a long-term care insurance policy.

Home Health. This is another type of home-based care that includes skilled nursing care or a type of therapy, like physical or occupational therapy. Medicare Part A covers home health that involves skilled nursing or therapy care as part of a care plan. However, it doesn’t cover assistance with activities of daily living or homemaking services.

Assisted Living Facility. Assisted living facilities offer some assistance to residents in their activities of daily living. These facilities are an option for those who can still take care of themselves most of the time but could use some help with things like:

  • House cleaning and chores
  • Laundry
  • Making meals
  • Bathing
  • Medication management; and
  • Transportation to medical appointments or shopping.

A typical assisted living facility includes some support services in its basic agreements, with the resident given the option to sign up for additional services a la carte at an additional cost. Most facilities offer three meals daily, 24-hour security and recreational events within the facility or outings. An assisted living facility doesn’t offer and can’t provide more intensive medical or daily living care. A skilled nursing facility is a better option for those needing a higher level of care.

Skilled Nursing Facility. Skilled nursing facilities, also known as nursing homes, provide state-licensed higher-level care, especially medical care that an assisted living facility cannot deliver. A skilled nursing facility offers the same services for daily living that assisted living can provide, but they also have trained and registered nursing staff for:

  • Nursing care
  • Rehabilitation services, such as physical, occupational and speech therapy
  • Aid getting dressed or in and out of bed; and
  • Frequent or daily medical management for chronic conditions.

Some skilled nursing facilities also have specialized memory care units to house and care for patients who have dementia, including Alzheimer’s disease.

Board and Care Homes. Board and care homes, the National Institute on Aging says, are sometimes known as residential care facilities or group homes. These comprise the largest market share of elderly care facilities and are similar to assisted living facilities. However, they’re smaller residences of 20 or fewer who live in private or shared rooms. They have staff available 24/7 to help with activities of daily living and usually include meals but not skilled nursing or medical care.

Continuing Care Retirement Communities. Sometimes called life care communities, these are “full-service” communities that include most or all of the above elder care options in one location. Thus, seniors can “age in place” as their needs change.

As you consider elder care options, it's also necessary to consider how you will fund the expense of these various living situations. A recent article from Kiplinger, “Long-Term Care Planning vs. Taxes: Finding a Healthy Balance” addresses two of the most common concerns of later life: the costs of long-term care and how to reduce or avoid taxes during retirement and upon transferring assets to heirs. While it's essential to find an elder care option that meets your needs, you also want to ensure that you don't spend all of your hard-earned assets on this care.

Long-term Care Insurance (LTC) is recommended for individuals and families under age 65 with investable assets ranging from $1.5 million to $3 million. The limits on net worth and age are based on striking a balance between the coverage cost and what benefits would be received. The initial goal of LTC insurance to finance the cost of assisted living and skilled medical care has now become more of a hedge against the final bill for LTC than total coverage of expenses.

With the chance of needing to live in an elder care facility and the average stay of three or more years, plus the cost of skilled care, this is now a major reason for people declaring bankruptcy during retirement. LTC insurance was sold as protection, but as life expectancies with medical conditions have increased, so has the cost of care. As a result, premiums have skyrocketed, and benefits have been reduced.

Universal Life Insurance with Accelerated Benefit Riders is an option better suited for people up to age 70 with $3 million to $5 million in investable assets. The premiums are high, but the policies act as a multi-use tool, providing coverage and the opportunity for wealth leveraging for the next generation.

Accelerated Benefit Riders (ABRs) are a special kind of life insurance rider triggered by medical conditions allowing the death benefit of the policy to be advanced to the owner during their lifetime, often up to 100% of the policy’s face value, for funding an extended stay in an assisted living or skilled care facility.

Asset Protection Trust Planning is the focus for most Americans with a net worth of less than $2 million. This is where the pressure of the costs for skilled nursing care is felt more intensely. Those with fewer assets have more to lose and need protection more than the wealthy.

Self-settled wholly discretionary grantor trusts, which are irrevocable, are used to house certain assets Medicaid would expect families to liquidate or spend before approving benefits to cover the bulk of the cost. Certain provisions of irrevocable trusts can be changed depending on the state of residence, such as who the trustee is and who the beneficiaries are.

The trustee should not be one of the grantors of the trust, and there is a five-year look-back on the trust’s funding. For example, if a grantor needs long-term care five years after assets were moved into the trust’s name, other assets will be needed to pay for the care.

Families are encouraged to plan early—ideally, just before or in the early years of retirement. The needs of the family drive which assets are placed in the trust. However, not everything goes. For instance, placing IRAs or other qualified accounts into an irrevocable trust would be unwise because this would be a fully taxable event. Roth IRAs may be placed in a trust. However, then they would lose their Roth status.

Careful planning with Experienced Elder Law Attorney Robert W. Haley can establish a balance between maximizing protection and minimizing taxes. Book a call with his team today.

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