Why Long Term Care Expenses can Bankrupt You

In this article, I will focus on Long Term Care Expenses and how they can bankrupt your life savings. Italian-Americans, like other groups, came to this country in search of the “American Dream” and worked hard to build homes for themselves and a legacy to pass to their children. Unfortunately, without the proper planning, expenses associated with Long Term Medical Care can very easily cost you and your family your life savings. Many of us have Health Care Insurance and, for those who are Seniors, you may also have Medicare. Most Health Insurances and Medicare will cover basic medical expenses such as Doctor Visits, Emergency Room Services, Short Term Hospitalization and Short Term Rehabilitation. The problem with Medicare and Health Insurance is that these policies do not cover expenses associated with Long Term Care. Long Term care is generally classified as a need for Permanent Home Care (Home Attendant in your home) or Long Term Institutional Care (Nursing Home Care). Often, a person is left with two (2) choices if they end up needing Long Term Care, either paying privately for the Care or attempting to make yourself eligible for Medicaid Services to cover the expenses. Paying privately for Long Term Expenses can be very expensive. Paying privately for a Home Care Attendant can cost between $2000 to $5000 a month, depending on the amount of care required. The average cost of a Nursing Home in New York City is over $10,000 a month, with some facilities charging even $15,000 a month! Clearly, paying privately for these types of services can quickly bankrupt most Middle Class people, even if you have savings.
As an Elder Law Attorney, one common phrase I hear is “I will never go to a Nursing Home” or “My kids will never put me in a Nursing Home”. Obviously, having family support can help keep you out a nursing home, but sometimes your medical condition may require a Long Term Stay in a facility. At a cost of $10,000 to $15,000 a month, even a stay of a few months could bankrupt many Middle Class people. Most nursing home stays begin with a period of “rehabilitation” which is covered by Medicare and Insurance, but usually only lasts 20 to 100 days. If you still require services after the “rehab period” is over, you will be deemed a Long Term Care case and the Nursing Home will begin seeking payment from you (or your family). The better option may be to try to plan in advance and make yourself eligible for Medicaid benefits. In New York, in order to be eligible for Long Term Care Benefits through Medicaid, the resource limit is $15,450. Since most Middle Class people own property and have assets in excess of $15,450, it is not always easy to obtain Medicaid benefits unless you plan in advance. In many cases, you can start protecting your assets in advance by placing them in an Irrevocable Trust. This can protect your assets and allow you to eventually become eligible for Medicaid to cover Long Term Care expenses. In future articles, we will more fully discuss irrevocable trusts and Medicaid eligibility. You can email your questions to [email protected]