The Greatest Financial Risk for Seniors:
Paying for Long-term Care, Part XX
(When a Disabled Child’s Parent Needs Long-Term Care)
Helen and her friend Joan came in to see me recently. Both were from Erie, both widows in their mid-seventies, and they had been neighbors and close friends for over 40 years. And they were both fortunate to be able to live comfortably by supplementing their Social Security and pension income with what they had carefully saved over the years. Joan had advised Helen to come to see me after Helen confided in Joan that she had recently been diagnosed with early-stage Alzheimer’s disease.
Helen knows that this will mean a loss of independence for her as time goes on, but she was most concerned about her son, Jack. His wife had died in a car accident several years ago involving a drunk driver and Jack himself was seriously injured. No longer able to work and having exhausted most of his savings on his medical bills, Jack survives on his monthly Social Security Disability (SSD) check and the financial help he gets from his mother.
Helen wanted to know if there were any steps she should be taking now to be able to continue getting the care she needs as her Alzheimer’s progresses without putting all of life savings at risk. She had friends who were struggling financially because of a spouse needing long-term care, but she was shocked when I told her that nursing homes in northwest Pennsylvania can cost $120,000 a year, or even more.
While her other two children were financially secure, they were all concerned about Jack’s welfare. Helen had hoped to leave most of what she had to Jack after her death so that he could live more comfortably. But with her diagnosis, she knew she would need a nursing-home level of care at some point, and at $120,000 a year, she risked losing her entire lifetime of savings in just a few years!
“I know you have a lot to be concerned about right now,” I tell Helen, “but paying for long-term nursing-home care does not have to be one of them.” I pointed out to her that her income, supplemented by her savings, would go a long way to pay for care in an assisted living facility, which typically costs about half that of a nursing home. And, as I explained to her, if she later needed nursing-home care, we should be able to get her eligible for Medicaid almost immediately. This is because Medicaid – which is the government program we have in this county that pays for long-term nursing care – has special rules for transfers to people with disabilities.
You mean I wouldn’t have to wait five years to become eligible for Medicaid?” asked Helen. “I thought you couldn’t do that anymore.” I explained that while there have been some changes in the law that makes it more complicated for seniors needing nursing-home care to qualify for Medicaid, the special rules regarding “disabled children” had not changed.
Because Jack is receiving SSD, he qualifies as a “disabled child” for Medicaid purposes; and although gifts made within five years prior to filing a Medicaid application must be disclosed and will usually create a period of ineligibility for Medicaid, transfers to a “disabled child” are exceptions to this general rule. This means that transferring assets to Jack would not create any delay in Helen’s ineligibility for Medicaid if she later needed to enter a nursing home. And because Jack was mentally competent and able to manage his own money, Helen could transfer assets directly to him rather than putting the money into a trust for his benefit.
Next month’s article will examine whether Joan, who does not have a “disabled child,” can also take advantage of Medicaid’s special rules.
The content herein is for general informational purposes only and does not constitute legal advice. For specific questions you should consult a qualified elder law attorney.
Note: Contrary to what almost everyone believes, if you or a family member has been admitted to a nursing home, it is NOT too late to protect assets. The Medicaid laws give seniors the option to protect a significant portion of their life savings, even when facing an immediate crisis, with no advance planning. However, “time works against you” when planning for long-term care; every day of delay in a crisis can result in $200 to $300 or more of irretrievable loss, so it is important that families who have a spouse, parent or other loved one needing long-term nursing care contact a knowledgeable and experienced elder law attorney for advice as soon as possible.
Kemp Scales is now retired, but elder-law attorney Schellart Los continues to serve clients throughout western Pennsylvania from offices in Erie and Titusville. She can be reached toll-free at (888) 827-2788 or by e-mail at firstname.lastname@example.org. Los Scales Elder Law, LLC has an Internet presence at www.losscaleselderlaw.com.
While the client names are fictitious, their stories and concerns are those of clients we have seen at our office. ↑
Long-term care insurance is one way to help cover the cost of long-term nursing care, but with Helen’s diagnosis of early-stage Alzheimer’s, she would not meet underwriting requirements for this private-pay option. ↑