Top Strategies to Pay for Eldercare

Planning for eldercare becomes more critical as you age. While there is Medicare that covers doctor and hospital bills for adults 65 years old and above, it does not cover anything. In fact, the most basic care, which is help with activities of daily living, is not covered at all.

Most of the elderly will need such care. More important, they will have to find a way to pay for it. Unfortunately, it is rarely cheap, especially if you live in high cost areas. It is great if you purchased long term care insurance but it can be a problem if you did not prepare enough.

Medicaid can be a solution.

You can apply for Medicaid to cover nursing home services or home- and community-based services for people who need assistance but not skilled nursing care. It can also happen that Medicaid can provide eldercare that will allow people to remain in their homes. However, the most important factor is to qualify for Medicaid to get the services.

Think twice about gifting assets before eldercare.

Some people simply give their money to a child or relative and trust this person to provide them eldercare. This is risky. Not because your chosen person is not trustworthy, but events in their own life may put your money in jeopardy, which will leave you without adequate care. Creating a trust may be better instead to avoid risks.

Consider a pooled trust.

In a pooled trust, you can make arrangements so that your excess income is paid to a charitable organization. You do not have control of the money but you can submit the bills to the charity for payment. If you are still living at home, you can use this for food and utilities, as an example. Check the laws in your state if pooled trusts are permitted.

Try setting up a personal care agreement.

A lump sum paid to a caregiver for future services may not be considered a penalized transfer if it is structured correctly. You can say that this is to reduce the size of your estate so you qualify for Medicaid or so that you can buy some care beyond what Medicaid provides.

The good thing about personal care agreements is you are able to ease the financial strain on your child or other relative who has given up work and sacrificed income to provide you eldercare. It is not easy – sometimes relationships rift because of the burden of care giving and such an agreement prevents that.

Your spouse can take over.

Setting up a spousal transfer is another option. A transfer of assets from one spouse to the other is not penalized under Medicaid. If you need to go to a nursing home, you can turn over your assets to your spouse and he or she will be legally obligated to provide you care. Your collective assets will be considered for Medicaid eligibility purposes. However, if your spouse signs a refusal, hr or she may be able to renounce that responsibility, making the other spouse immediately eligible for Medicaid.

The bottom line is you have to plan ahead to consider the costs of eldercare. Look for ways to fund long term care services so that you or your family will not be impoverished.

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MJ Usner