About 70 percent of people who are now turning 65 will require long-term care at some point during their lifetime. Many of those people will spend at least a year in a nursing facility, at an average cost of $6,300 per month.
Help with Long-Term Care Costs
Most people cannot afford to cover these costs on their own, and many assume that Medicaid or Medicare will pay for it. But how you set up your estate and long-term care plan make the difference between getting that coverage and paying tens of thousands of dollars.
In this case, we’re talking about Long-Term Care Medicaid. The program is set up to be the “last resort.” That means you don’t qualify for this coverage unless you have no other way of paying for care. The problem is, many people can’t afford to pay for care, but then don’t qualify for long-term care, either. So what can you do?
Determining Assets
The program identifies whether you can pay based on what is called “countable assets.” What we can do is help you take countable assets and make them non-countable. One way people try to do this is by gifting money. For example, you might give your son $1,000 per month for helping you around the house, driving you to appointments, and caring for you. But if you do that, you receive a time penalty; you won’t be able to apply for Long-Term Medicaid for 1.9 months. This is based on the formula of nursing home costs: $12,000 divided by the monthly cost of $6,300.
How Care Contracts Work
A care contract (also called a personal care contract or caregiver contract) is an agreement between a family member(s) and their loved one that outlines their terms of elder care.
If you created a care contract before you gave your son the money, that money isn’t a gift. Now, it’s payment. And if you apply for Long-Term Medicaid, the government shouldn’t penalize you for it.
Care Contracts look a lot like any other agreement, outlining what one person will do as part of his or her work in exchange for the money. These agreements list out responsibilities such as nutrition, cleaning, outdoor maintenance, and housekeeping.
Other Benefits
Aside from the health insurance benefits, there are other reasons to create a care contract. The value of uncompensated care provided by family or friends is estimated at $450 billion annually.
Caring for an aging parent or older loved one can be time-consuming and costly. Often, the caretaker still has other family members or children to look after; he/she may also have a job or other personal requirements which make caring for an older family member difficult.
A care agreement details exactly what the caretaker(s) is responsible for, and can even work out a system of compensation between the two parties. This can be especially important if the caretaker has sacrificed employment to care for his/her elder. The contract also outlines exactly who will be receiving compensation and the responsibility of caring for the elderly, to avoid misunderstandings and arguments between family members later on. While a contract between loved ones sounds odd to some, the document often smooths the way for a good relationship.
Our attorneys can help you create an agreement so that you don’t lose time or money later. To get help starting your care contract, contact us.
