As our parents age, they can become increasingly confused about how to manage their finances. They may be concerned about how they will pay for a nursing home if they need more care than they can get at home. Unfortunately, well-meaning friends and lawyers who do not understand Elder Law can give bad advice. Bad advice can end up costing a lot of money.
Many elderly people come to me for help, only to find that they followed bad advice and ended up in a financial bind. While it may seem logical to give your money away to prevent losing it all to pay for long-term care, this is the number one planning mistake for older Americans.
You may have heard of the "5 year look-back" for Medicaid benefits. When a person applies for government benefits to help pay for long-term care, the State of Ohio will look at 5 years of all financial statements, including bank statements, investments and tax returns. If you have given away anything, you will be penalized for the value of that gift. In other words, you may qualify for Medicaid based on your lack of resources, but if you gave assets away in the past 5 years, you will be penalized according to a complicated formula. This means that you will end up having to pay out of pocket for a nursing home for a period of time, which can cost between $7,500- $10,000 per month. Not many people can afford to do that. So what is the alternative?
An experienced Elder Law Attorney can help you avoid the pitfalls of bad advice. Medicaid Planning is a very specialized area of law that changes every year. While none of us know if we will eventually need care in a nursing home, AARP statistics state that over 70% of us will find ourselves needing some type of long-term care. The average stay for a man is about 2 years ($180,000 @ $7,500/mo). The average stay for a woman is closer to 3 years ($270,000 @ $7,500/mo).
The best time to begin planning for long-term care issues is around the age of 65, earlier if you have significant health issues. The important thing to remember, though, is that it is never too late to consult an Elder Law Attorney. If someone you love is currently in a nursing home and paying out of pocket, every day you wait is money you cannot get back. By consulting an Elder Law Attorney, you can qualify for benefits sooner and protect a portion of any remaining assets.