Helping Aging Families Qualify For State Assistance Without Going Broke: A Financial Rock And A Hard Place

As the baby boom generation ages at the same time that health care costs are rising, many middle class elderly individuals and their families face the prospect of paying enormous health care costs. Chief among these is the cost of skilled nursing facilities, which range from $5,000 to $15,000 a month. For middle class families, these costs can quickly eat away a nest egg or potential inheritance. Indeed, many individuals find out only after their loved one has died that the state will come and make a claim against the estate to recoup Medicaid payments made to an individual who qualified for Medicaid during life but did not properly plan. With careful estate planning, through a trained Elder Law attorney, it may be possible to get needed care while protecting assets along the way.

Consider that, according to the US Census Bureau, in 2015, North Carolinians’ median household income was $46,868. While according to an annual survey by Genworth, a North Carolina full-time home health aide charges, on average, $18 an hour–$42,710 a year.

That’s peanuts compared to residential nursing care facilities. The 2015 median cost for a private room was $82,215. And it depends on where in the state you are. In Asheville, North Carolina, for instance, that room’s cost can run a daunting $94,353 a year or possibly more.

North Carolina’s Medicaid program can pay for either in-home or residential care; however, here are the rock and the hard place. It is a means-based program. People must have an income below the costs of care to be eligible, and they’re still expected to pay a portion of expenses. Worse, many if not most people’s social security income and/or retirement pensions alone will prevent them from receiving assistance for home based care, even if savings are not an issue.

And if Medicaid does help cover a loved one’s long term care needs during his lifetime, this doesn’t automatically end financial liability. After a Medicaid recipient passes away, the state can demand reimbursement from the deceased’s estate–potentially leaving surviving family members with nothing left to inherit.

But now for the good news. Proper legal planning can help. One such option: creating a Testamentary Special Needs Trust at the first spouse’s death. Assets put in this trust, such as a family home, can be excluded from Medicaid calculations. However, it’s essential this be done correctly. Mishandling asset disposition can mean losing Medicaid eligibility.

Therefore, this is something best left to experts in Elder Law–those who know the inside and out of Medicaid and other benefit programs. Families with questions should not merely rely on answers from the Department of Social Services (DSS). Like the I.R.S. and the Department of Veterans Affairs, DSS may give out answers that are not fully complete or which are based on incomplete information, which can give rise to an incorrect conclusion. That may be just as well, since DSS is not supposed to give out legal advice.

Just as you would seek a medical specialist for insight into a complex medical problem; likewise, you should seek out specialized legal advice for complex Elder Law questions. Elder Law attorneys, with their expertise, can help your family maintain their piece of the American Dream.