Q. Without long-term care insurance, in addition to potentially depleting one’s savings, are other assets, like one’s home, also at risk should funds be needed to pay for long-term care?
— Planning ahead
A. We’re glad you asked this question. Too many people don’t consider the cost of long-term care until it’s too late.
This kind of care can cost more than $100,000 a year in New Jersey, and it’s not easy to get a free ride.
Long-term care facilities will need to be paid using a resident’s assets in order to move in and remain at the facility, said Tim Ford, a partner with Einhorn Harris in Denville.
Those assets include Social Security, pensions, real property, investments and any other assets, he said.
“Often, long-term care insurance will help to offset the cost of services, but may not cover the entire expense, requiring residents to use their assets for the uncovered portion of the resident fees,” Ford said.
That means residents must “privately pay” with all of their assets.
When a resident’s assets have been exhausted, the resident can apply for Medicaid, Ford said.
“In order to be eligible for Medicaid, one’s assets must be below $2,000, including bank accounts, investments, real property and any other assets,” he said. “Medicaid will review each application and engage in a five-year `look back’ to see if an applicant has made any transfers of property or gifts that may render them ineligible or result in a penalty period.
For purposes of Medicaid eligibility, your primary residence is an exempt asset as long as you or your spouse, if any, reside in the house or intend to return to the house to reside, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.
Romania said Medicaid will have an automatic lien on any interest in a residence in your name equal to the amount of Medicaid funds received by you. Upon sale of the home or upon your death, Medicaid will execute the lien — unless your spouse remains an owner of the residence.
Frequently, Ford said, long-term care facilities will require that a resident “spend down” their assets for a specific period of time — often one or two years — before the facility will consider offering a Medicaid bed to a resident.
“Facilities are not required to accept each and every Medicaid approved resident,” he said. “Each facility is licensed and its license sets forth the minimum number of beds at the facility that must be set aside for Medicaid eligible residents. As a result, wait lists for Medicaid beds are not uncommon.”
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