Jenny Rozelle, Host of Legal Tea
Current Trends - Inflation & Long-Term Care Costs - Episode 64
Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle. Welcome back for another episode of Legal Tea! Today’s topic is a current trend … something going on in current time, that is pertinent to my little estate and elder law world. This week’s episode is going to be on long-term care and specifically, how some experts and sources are saying that inflation is driving long-term care costs … even higher. I mean, they were already high, high, high to begin with – so, now that experts are saying inflation is increasing those costs, it may be something you should 1) be aware of and 2) seek an elder law attorney’s advice on – especially if you are getting to or at an age where long-term care is a possible thing.
What really caused me to think about this topic and to bring it up here on Legal Tea is that I stumbled upon an article on CNBC written by Stephanie Dhue and Sharon Epperson titled, “Inflation Drives Long-Term Care Costs Even Higher. Here’s How Planning Ahead Can Help Families Afford It.” Talk about women after my own heart – my goodness! Planning for Long-Term Care in advance is much of what I do as an Estate and Elder Law Attorney, so kudos Stephanie and Sharon for bringing such an important topic and issue up. So many people put off this conversation and planning ahead … hopefully many saw this article and will proactively plan as a response!
The article kicks things off with a story – a real story about a gentleman named Martin. Martin was in his late 80s, lived alone, and was “reluctant to accept any assistance from his children.” Fast forward some time, Martin’s children stopped by Martin’s house and found him unconscious in his living room after a fall. After that, Martin was completely unable to return home and ended up going into a nursing home wiping out his life savings of $300,000. Because now that there is no money, he automatically qualifies for Medicaid. I bring this story up because I hear about these awful stories all the time. This is a very real, very frequent occurrence – I’m sure you know of this happening to people you know. What if I told you that an Elder Law Attorney, had they gotten involved, could’ve saved some of that $300,000. We’re going to talk more about that in a it, but for now, let’s keep chatting about long-term care costs/inflation.
As in many industries and sectors, long-term care communities are experiencing impacts related to rising costs and inflation. For example, the CNBC article references a survey that was conducted by National Investment Center (“NIC”), who collects a lot of data on skilled nursing homes. The survey asked owners and executives of 55 small, medium, and large senior housing communities what was “their most pressing worry facing their organization.” Through the pandemic, overwhelmingly, the biggest concern was staffing – and staffing shortages, specifically. Though, in a somewhat-newly released, the owners and executives of 55 small, medium, and large senior housing communities said their biggest worry was … rising operating expenses. Aka, rising costs due to inflation.
Back to the CNBC article, they share that it makes sense. That, we’ve all faced higher priced items at the grocery store, right? Well, that’s what is happening with the nursing homes, too, that their food, supplies, etc. have increased and, you know, you can’t really cut those expenses at a place that is caring for other human beings. They are vital. So, with these rising costs, many think that long-term care, which is already quite expensive, will increase even more. So, let’s talk about HOW MUCH they do cost, in case you have no idea. Well, they widely vary depending on state – and even within the states, they vary. Like, a portion of my law firm/practice is about 30 minutes north of Indianapolis, Indiana – so facilities around me are usually more expensive than facilities, say, in more rural areas of Indiana.
Just to give you some ball park figures, assisted living is usually $3000-$5000 per month; nursing homes are usually $8000-$10,000 per month, and home health care is usually all over the board because they’re often by the hour. So, if you need like 5 hours a week, that’s not too costly, but if you need 24-7 care, well your cost just drastically increased – probably to the point of being north of what skilled nursing even is. Crazy enough, my husband, who, if you didn’t know, is an estate/elder law attorney (same practice as me), met with a family, oh, a few weeks ago – their Mom was paying like $10,000 per month at a really, really nice senior community, but she needed 24-7 care ON TOP of the community she was in (it wasn’t nursing home setting) – she was basically in like independent living, but had 24-7 home health care coming in, too. Are you ready for this? They were forking out $30,000, yes $30,000, EVERY SINGLE MONTH for their mother’s care. Isn’t that nutty?
Beyond the “how much does this cost” topic, long-term care is something that is going to happen to a majority of us. Here’s what the statistics say – according to the US Department of Health and Human Services, once you hit 65, there is a 70% chance you’re going to need some type of long-term care eventually. 70! Furthermore, even though a majority of us will end up there, not even close to a majority invest in long-term care insurance (which is expensive and difficult, sometimes, to get medically qualified). Actually, according to a survey conducted by Arctos Foundation and HCG Secure, 1 in 10 middle-income adults do not have long-term care insurance. So, what does that mean? Well, what it means is that if you end up in long-term care, your payment methods have decreased – you’re either going to pay private (so pay those costs I just talked about) or do advance planning to be able to qualify for Medicaid. Let me loud and clear about something…
Medicare does NOT cover costs associated with long-term care. I repeat, Medicare will not help you out with the cost of long-term care like home health care, assisted living, and nursing homes! So, if you’re banking on Medicare (which is different than Medicaid) to help you if you need long-term care, well, I guess I get to be the bearer of bad news.
So, let’s talk options – let’s talk about how you pay for the cost of long-term care, whether inflation has gotten a hold of it and it’s even more expensive than it normally is, or even if inflation is not a part of it and it’s what it normally is (the costs I referenced earlier; the $3000-$5000 a month for assisted living and $8000-$10,000 for nursing homes a month). Like I said, most people do not have long-term care insurance; actually, when I see a client that has it, it surprises me because I’m so used to helping people that do NOT have it. Anyway, when you don’t have long-term care insurance, you have two options: 1) Privately pay your way; 2) Medicaid. Let’s talk about both.
Privately pay, what does that mean? Well that means that every month, you pull out your checkbook and write the long-term care facility a check, whatever that amount is. Could you eventually run out of money? Sure, you sure could. That means, if you have no money left, you’ll automatically qualify for Medicaid to start footing the bill. Now, don’t get too excited and think you’ll be able to just throw all your assets at your kids or something – that’s not going to work. They have a lookback period in which they’ll see that you’ve thrown your assets at your kids and it’s not magical that you have no money now, they’ll know and you won’t qualify. So, when I say you have no money left, it’s because you spent all of your assets on yourself or your care.
Now, on to Medicaid, so what I tell everyone about Medicaid is most of what you’ve heard about Medicaid is probably a half-truth. Medicaid is very misunderstood because for starters, they have two different rule books – they have a rule book for singled individuals and a separate rule book for married couples. Beyond that, while Medicaid is a federal program, each state interprets the rules differently, so even state-by-state is different. So, if you hear, “Well, my friend’s widowed Grandpa in Georgia lost everything to Medicaid because…” That sounds like your friend’s Grandpa is single (so by the single individual rule book) and in George (so under Georgia Medicaid law). That’d be vastly different than, say, a married couple in Minnesota, right? That’s how Medicaid gets all these misconceptions because people talk, then it becomes the game of telephone!
Well, what I can tell you as an Elder Law Attorney is that the sooner you start to plan, the better – meaning, there are tools in my world that will help you safeguard your assets against long-term care and Medicaid down the road. It’s involving a very specific type of Trust, which maybe I can talk about more in depth in another episode, but what it does is it, sort of, works like a safe – that, ideally, this Trust is setup and assets funded into it at least five years before any need for long-term care; that will get the MOST amount of protection. Though, even if we don’t have five years, things can still be done – especially in a married couple case. So let me say something else loud and clear…
If you want Medicaid to foot the bill for a long-term care stay or home health care and you have not done any planning, like the Trust I explained, it may not be too late – so don’t get discouraged; seek advice and counseling from an Elder Law Attorney.
Speaking of that, and I’ll make these my parting words, THAT is what an Elder Law Attorney is/does. Not every Estate Planning Attorney dabbles in Elder Law, so if this topic is something you’re interested in, I’d highly recommend finding an attorney that is skilled in both the Estate and Elder Law fields – actually, my office has attorneys that only practice Estate Planning, meaning they do not do any Elder Law, and any time they have a case/a client that needs Elder Law expertise, they send them our way. Medicaid is quite the beast – and I appreciate any attorney that will throw their hands up and say, “Hey – that’s not my skill set!” rather than try to dabble in it. I’d fear that they may not really know what they’re doing and … what if they mess something up? You’re playing with money at that point, my friends. Let’s not let money go to waste like that.
Alrighty, next week’s topic is on estate planning of the rich and the famous – on that episode, it’s going to be quite the timely one, we’re going to talk about Queen Elizabeth and with her very recent passing, what’s said is going to happen to her fortune. Tune in next Tuesday, Legal Tea Listeners, to hear all about it. Talk to you then and stay well!