Many 65 year olds are happy, healthy, active people who are enjoying the transition to senior life. Whether they’re preparing for retirement or already retired, traveling, working, spending time with their adult children and/or grandchildren, finding new hobbies, volunteering, or something else, most are building the new chapter of their life and are determined to make these golden decades count. However, 65 represents an important turning point for many seniors even if it may feel like just another year, specifically because you are getting closer to retiring (which may happen at age 66 or 67) and you are eligible to enroll in Medicare.
However, there is a common – and dangerous – misconception that many 65 year olds have about Medicare, which is that it will be the end-all be-all for healthcare cost coverage. They think that by having Medicare, they won’t have to worry about health bills, when really this couldn’t be farther from the truth.
Besides the fact that Medicare doesn’t cover the costs of prescription drugs, routine dental exams, dentures, routine eye exams, glasses or contacts, hearing aids, routine foot care, or chiropractic care, it also doesn’t cover the costs of custodial or long-term/nursing home care. While all of the other costs can add up (and there are different options, such as Part C insurance plans or private health insurance plans, to help with those), nursing home costs aren’t covered by other health insurances, and are significantly more expensive than other health bills. For example, in the state of California, a semi-private room in a nursing home can cost between $8,000 to $10,000 per month. A private room can cost upwards of $11,000 per months. Seniors in today’s world are living longer than ever before and needing to enter nursing homes at higher rates and for longer periods of time. Say you only need to be in a nursing home for two years, and it costs you $10,000 per month; that’s $240,000 in care costs alone, not to mention other services you may need and
So there’s the first reason why you need to plan for nursing home costs if you’re over 65 – they are expensive, and they aren’t covered by Medicare!
Then there are the consequences of not planning ahead. If you are like most seniors who are on fixed or low incomes, you’re faced with a few options….
- You may have to empty out your life savings in order to pay for care.
- You may have to go without the care you need.
- You may have to have your family help pay for it, becoming a financial burden to them.
Planning ahead can save your hard-earned wealth, your children’s inheritance, your relationship with your family, and your own peace of mind. It’s necessary!
What this looks like practically is planning specifically for Medicaid (which in California, is also known as Medi-Cal). Medicaid, unlike Medicare, can help seniors cover the costs of long-term care; it is a government financial aid program targeted towards seniors, those with disabilities, and low-income families. Medicaid has strict income requirements that every applicant must meet to qualify for assistance. The program also has resource requirements, meaning that even if you aren’t making much, if you have a lot in terms of real estate, savings accounts, other assets, etc., you probably won’t be able to qualify.
Some people over 65, particularly those in the middle class, assume that because they aren’t wealthy, they will be able to qualify easily, but they are often surprised (and dismayed) to find that they are in a tough catch-22 of having too many assets to qualify for Medicaid yet not nearly enough to afford nursing home care. Medi-Cal draws the eligibility line at $19,392 in income limits before taxes for a 1 person household and $26,228 for a 2 person household. Again, because nursing home costs can be $240,000 per year, this just doesn’t add up!
That’s why Medicaid planning is so important. If you plan ahead and work with an experienced attorney well before you actually need to enter a nursing home, you can create trusts and other tools that can shield your assets, or convert them to “non countable” assets, so they won’t count against you when you go to apply. If Medicaid planning is done correctly, you and your family will still be able to access the assets, but they won’t be necessarily owned in your name.
Medicaid does consider any gifts or transfers to trusts made within 5 years of applying to count towards eligibility, so that’s another reason why you need to plan for nursing home costs if you’re over 65 – you don’t know what the future holds or when you will actually need care. If you wait too long to plan, it may be too late to qualify for financial aid.
Planning for Medi-Cal protects everything you’ve worked for and everyone you love. Equal Justice Law Group, one of California’s premier Medicaid planning law firms, will take the time to get to know you, answer all of your questions about the process, and explain your options (which may include gifting, asset exempting, irrevocable trusts, and more). We won’t just draw up confusing legal documents and send you on your way; we invite you into the process. To us, every client is a partner! Our assisted living planning attorneys, led by David Foyil, are friendly and highly knowledgeable. We have been helping people over the age of 65 in California for over 21 years. To date, we have served over 7,000 clients! We can secure your legacy so that you can leave money behind to your children, enjoy the level of retirement you aspire to, and still be taken care of in a nursing home should you need it down the road. You can contact one of our offices (in Sacramento, Jackson, and El Dorado Hills) to schedule a free, no-obligation consultation and get started.