According to Genworth, the national annual median cost for a nursing home facility is $93,075 for a semi-private room and $105,850 for a private room. A common concern for many individuals and families is that they may require nursing home care in the future, which could deplete the hard-earned assets of their estate.
Title 19 (also referred to as “Medical Assistance” or “Medicaid”) is a joint federal-state welfare program which provides funding to cover the costs of nursing home care for individuals who meet certain income and asset requirements. For an unmarried person to qualify, the asset limit is $2,000 in “countable” assets. In Wisconsin, the Title 19 asset limit for a married couple in 2021 is $2,000 for the applicant and $130,380 for the non-applicant. Certain assets are exempt, or not treated as “countable” assets. The most common are your homestead, your automobile, household and personal items, and prepaid burial arrangements. Be aware, however, that Wisconsin will be able to make a claim on your entire estate at your death, and also on your spouse’s estate at his or her death, for reimbursement for money the state has spent for your care.
The most common methods for protecting assets are:
1. Gift assets to your children. Any gifts must be made 5 years prior to applying for Title 19 benefits. Further, gifting requires that you give up full control of those assets and also provides no protection for your children should they run into creditor issues, including issues that are no fault of their own such as uninsured medical expenses.
2. Create an irrevocable Medicaid asset protection trust. Assets placed in the trust are not considered countable for Medicaid qualification purposes and are not subject to Medicaid payback claims upon your death. Trust assets are protected from creditors of the trust beneficiaries (typically these are your children). If you transfer your primary residence to the trust, you may continue to live in your home just as you did before the trust was established. Note that the same 5-year “look back” period applies to transfers to an irrevocable trust; therefore, advanced planning is necessary for this strategy to be effective. Also note that a revocable living trust will not protect your assets from nursing home care costs.
3. Acquire long-term care insurance. If you qualify and if you can afford this type of insurance, it’s often the best way to protect your assets from nursing home care costs.
While there is no perfect solution for the nursing home dilemma, understanding your options and planning in advance with your estate planning attorney and your financial advisor can provide the appropriate level of protection when the time comes.
Learn more and begin the estate planning process by contacting Horn & Johnsen SC today: https://hornjohnsen.com/contact-us/