Certain life events require long-term financial planning. Some of them are wonderful experiences, such as an adoption or helping a child attend college. Some events, however, can be emotionally difficult but still require financial preparedness. These can include divorce and planning for long-term care.
Alzheimer's disease and dementia pose a particularly difficult problem. Unfortunately, Alzheimer's is affecting a larger percentage of the population than ever before. According to the Alzheimer's Association, people suffering from Alzheimer's will increase 40 percent in little over a decade. The Association estimates that as many as 16 million people will have Alzheimer's by 2050. Alzheimer's and dementia often requires around-the-clock care at a long-term care facility or nursing home.
Such care is expensive. According to Genworth, the average cost of a private room in a Florida nursing home is $91,000 per year. Obtaining a home health aide is upwards of $40,000 per year. For relatives and spouses willing to care for an ailing loved one, there are still costs associated with medication, lost wages and other expenses. These costs are why it is so important to prepare for the possibility of needing long-term care.
Creating a plan
There are three means of providing long-term care to someone suffering from Alzheimer's or dementia. The first is to pay costs out-of-pocket. Few people have the resources to do this, considering that Alzheimer's patients generally require years of extensive care.
The second is through long-term care insurance. While this insurance is extremely beneficial, it can also be expensive and difficult to meet eligibility requirements. Many people forego this insurance because of its expense.
The third is to pay for care through Medicaid. This needs-based government program also has strict eligibility requirements, however. In order to qualify, a person must have limited assets and income. While pre-planning can help reduce an estate to qualify for Medicaid, this must be done carefully and in accordance with the law. A person recently diagnosed with Alzheimer's, for example, cannot gift all of his or her assets to a relative and then immediately qualify for Medicaid without facing a financial penalty.
Long-term care planning starts now
Some assets do not to be reduced or gifted in order to qualify for Medicaid. For example, a person's home, household goods and prepaid funeral arrangements don't count as assets for purposes of qualifying for Medicaid. There are also certain payments that a person can make without garnering Medicaid penalties. An example would be paying for caregiving services that allow the person suffering from Alzheimer's to avoid having to enter into a nursing home.
Medicaid and asset protection planning are complex areas of the law. In addition, creating a financial and medical power of attorney and living will are extremely beneficial when contemplating long-term care. People considering how to pay and prepare for long-term care should contact the experienced elder law attorneys at the Brandon Family Law Center to discuss their options.