Long Term Care: A Painful Reality

Paying for long term-care is not easy. Most people would not choose to live in a nursing home; however, sometimes it is unavoidable. The average monthly cost of nursing homes in our area exceeds $6,500. Assisted Living and home care are also very expensive. Here are some common misconceptions about long-term care:

1. Medicare will cover my nursing home bill - Not true. Medicare is a federal program that provides very limited coverage for certain short-term nursing home stays but no coverage for long-term care in a nursing home. Many people confuse Medicare with Medicaid, since the names are very similar; however, the programs are very different. Medicaid is a means-tested program, which has very strict income and asset requirements. Medicaid will pay for long-term care if you qualify. Medicare will not pay for long-term care. This may seem unfair, but it is the law.

2. Once I enter a nursing home as a private pay resident, I must use up all of my assets before I can qualify for Medicaid - Not true. Although it is better to begin planning earlier, you may still protect almost one-half (and in many cases substantially more) of your assets even if you are already in a nursing home. Remember, the sooner you engage in elder law planning, the more assets you can protect for yourself and your family.

3. My power of attorney has the power to transfer assets out of my name in order to qualify me for Medicaid. There are many different types of powers of attorney and you will be able to protect your assets only if you have the proper power of attorney. In order to have the power to transfer your assets for tax and long-term care purposes, your power of attorney must have very special language authorizing these types of transactions. Unfortunately, the vast majority of powers of attorney do not have these provisions. In addition, your agent may need additional authority to create and fund a special kind of trust, known as a qualified income trust, which may be necessary to establish your eligibility for Medicaid under Florida law.

4. I should transfer my home to my children to get it out of my name – Not true. The many problems to this approach include creating unnecessary gift and capital gains taxes and losing the legal right to live in your home.

Fortunately, there are better ways to transfer your home to your children that avoid these pitfalls. Other techniques, such as the execution of a revocable trust to hold your homestead property, or the execution of a deed with an enhanced life estate, are more sensible approaches.

Howard S. Krooks, J.D., CELA, is a partner with Elder Law Associates PA, with offices in Boca Raton, Aventura, Weston and West Palm Beach. Mr. Krooks is certified as an Elder Law Attorney by the National Elder Law Foundation. He serves on the Board of Directors of the National Academy of Elder Law Attorneys, is a member of the Joint Public Policy Task Force of the Florida Bar Elder Law Section and the Academy of Florida Elder Law Attorneys, and is a past Chair of the New York State Bar Association Elder Law Section. Mr. Krooks may be reached at (561) 750-3850 or visit the firm’s web site at www.elderlawassociates.com.