As we age, the likelihood of requiring long-term care increases, making funding long-term care a critical component of estate planning. At Surprenant & Beneski, P.C., we understand the importance of preparing for contingencies. In this blog, we’ll explore the options for financing long-term care, focusing on self-funding versus insurance, and how our attorneys can help you create an estate plan that protects your assets while ensuring you’re prepared for any future care needs.
Understanding Long-Term Care in Massachusetts
Long-term care in Massachusetts encompasses a range of services designed to support individuals who require assistance with daily activities due to aging, illness, or disability. This care can be provided in various settings, including nursing homes, assisted living facilities, and even in the comfort of one’s own home through home health care services.
Financing these services can be expensive and complicated to arrange, but a common avenue is through MassHealth, the state’s Medicaid program. While MassHealth provides coverage, to be eligible for these government funds, individuals must meet not only medical criteria but also financial ones as well because Medicaid is a means-tested program.
Funding Options: Self-Funding vs. Insurance
When it comes to paying for long-term care, individuals not eligible for government funds have two primary options: self-funding or purchasing long-term care insurance. Self-funding involves using personal savings, investments, or other assets to cover the cost of care.
While this approach provides flexibility and control over how funds are allocated, it also carries the risk of depleting assets rapidly, potentially jeopardizing financial security. This is because on average nursing home care costs well over $100,000 per year and both assisted living and in-home care costs over $60,000 annually.
Long-term care insurance, on the other hand, offers a solution by providing coverage for a range of long-term care services, including nursing home care, assisted living, and home health care. By paying regular premiums, policyholders can safeguard their assets and mitigate the financial burden of long-term care expenses. However, it’s essential to carefully review policy terms, coverage limits, and premium costs to ensure that insurance aligns with your specific needs and budget.
Creating an Estate Plan to Protect Your Assets
At Surprenant & Beneski, our experienced attorneys specialize in creating comprehensive estate plans that address your long-term care needs while safeguarding your assets. We understand the complexities of Medicaid eligibility and are adept at devising strategies to help you avoid a Medicaid spend-down to ensure you retain control over your assets and receive the care you deserve. Some of the methods we may incorporate into your estate plan include:
Irrevocable Trusts
An irrevocable trust is a valuable tool for protecting assets while planning for long-term care. By transferring assets into this type of trust, you remove them from your estate, shielding them from Medicaid’s spend-down requirements. This allows you to preserve your wealth for your beneficiaries while still meeting Medicaid eligibility criteria. While you must relinquish control of the assets, you can appoint a trusted individual as the trustee to manage them. Planning ahead is essential due to Medicaid’s five-year look-back period.
Medicaid Compliant Annuities
Medicaid-compliant annuities can help safeguard assets while meeting Medicaid eligibility requirements. These annuities convert countable assets into a structured income stream that Medicaid does not count toward its financial limits. They are particularly beneficial for married couples, as they ensure the community spouse has adequate income while preserving assets for heirs. Our attorneys can help you establish annuities that comply with state and federal regulations, protecting your wealth while providing the necessary income to cover care expenses.
Strategic Gifting
Strategic gifting is an effective way to reduce your estate size and prepare for Medicaid eligibility. This approach involves transferring assets to loved ones or placing them into trusts. However, Medicaid’s five-year look-back period requires careful planning to avoid penalties. Our attorneys will help you create a gifting plan that aligns with Medicaid rules, balancing your goals of providing for your family, preserving your financial security, and preparing for long-term care expenses.
The Takeaway
The goal of our attorneys at Surprenant & Beneski is to protect your financial well-being at every stage of life. We are aware that you, like all of our clients in Southeastern Massachusetts, must be proactive in preparing to fund long-term care, whether through pre-arranged self-funding, investing in long-term care insurance, or readying your assets to allow your eligibility for MassHealth benefits. We will guide you through whichever process you choose. Contact us today for a consultation that will give you peace of mind about the future.