There are unprecedented numbers of people attaining senior citizen status at the present time because of the maturation of the baby boomer generation. According to the United States Social Security Administration, about 10,000 applications are being submitted daily. This volume is expected to continue into the foreseeable future. As a firm that focuses on elder law issues, this phenomenon is quite relevant to us, and there is a major issue that all of these people should be concerned about.
The United States Department of Health and Human Services has developed a website that is devoted to the subject of long-term care for American senior citizens. There are a lot of statistics on the site, and one of them captures your attention immediately: seven out of every 10 people that are turning 65 on any given day will eventually need living assistance.
While it is true that there are people that will be able to get the help that they need in their own homes for free from family members and friends, the situation may evolve. At some point, an individual that was capable of living at home may be more comfortable in an assisted living community. There are also those that require a level of care that only a nursing home can provide.
There are many different reasons why people ultimately require nursing home care, but Alzheimer’s disease is one of the leading culprits. It strikes about 40 percent of people that are 85 years of age and older, and this is the fastest-growing segment of the population. To put this into perspective, if you are fortunate enough to celebrate your 68th birthday, it is statistically likely that you will reach your mid-80s and perhaps beyond.
The age of eligibility for Medicare coverage is 65, and this will serve as a solid form of health insurance when you qualify. It is important to understand the fact that there are deductibles, co-payments, and premiums that come out of your pocket. You should do some research and find out what you can expect with regard to these costs and budget accordingly when you are planning for retirement.
For people that have a reasonable store of resources and a solid income stream, these out-of-pocket expenses are usually not going to be devastating. However, the bad news is that Medicare does not pay for long-term care. As we have established, it is likely that you will need living assistance eventually, and you may well reside in a nursing home at the end of your life.
Long-term care is very expensive all around the country, but here in northern California, the costs are higher than the national averages. Genworth Financial does a very good job of keeping a finger on the pulse of assisted living costs in the United States. They post national figures, and they drill down to states and metropolitan areas within the states.
We have an office in Campbell, which is near San Jose. According to the Genworth survey, the annual median cost for a one bedroom unit in an assisted living facility in the San Jose area was $72,000 in 2021. For a private room in a nursing home, the figure was nearly $187,063. In Santa Cruz, the assisted living community cost was right around $66,600, and the charge for a private room in a nursing home was $144,175. If you imagine a scenario where you live for a number of years in an assisted living community and move into a nursing home after that, the combined expenses could be financially devastating.
Fortunately, there is a solution in the form of Medi-Cal. This program will pay for long-term care if you can obtain eligibility. As you are probably aware, Medi-Cal is intended for people with very limited financial resources. As of July 2022, there is a $130,000 ceiling on assets, but everything that you own is not counted. Plus, there are certain protections for a healthy spouse that is still living at home when his or her spouse is applying for Medi-Cal coverage to pay for long-term care.
To obtain eligibility, many people will divest themselves of assets to stay under this modest limit. However, these divestitures must be completed at least 30 months before the application for Medi-Cal coverage is submitted.
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If you would like to learn more about nursing home asset protection, you can click this link to request a consultation, and you can also reach us by phone at 408-356-9200 or 831-476-2400.