Planning for Long-Term Care in New Jersey

Things to consider include: Medicaid, LTC insurance and a trustworthy attorney

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Estate planning is not just for the wealthy. Everyone needs to think about how care will be paid for as we approach the end of our lives, and how this may affect our children and grandchildren. No one wants to be a burden and, if possible, we’d all like to pass something on. Hoping for the best is not a plan, and can have devastating effects.

“If you don’t plan and something happens, chances are you’ll spend hundreds of thousands of dollars on long-term care,” says Bridgewater elder law attorney Lawrence Friedman

For every year you survive beyond the age of 65, you become statistically more likely to have need for long-term care (LTC). LTC can be anything from in-home care to a skilled nursing facility. Nursing home care and other forms of LTC are costly. In New Jersey, you can expect to pay $350 per day or more (that’s over $10,000 per month) for a nursing home, depending on where you live and the level of care needed.

Planning for long-term care is a complicated undertaking, in part because there are many variables and each person’s situation has different factors in play, including information you can’t know in advance, like when you’ll need it. But it’s less expensive and easier on your loved ones to plan ahead than to figure things out in a crisis. Working with a reputable estate planning attorney will help you assess your needs.

Medicaid Eligibility

Don’t plan to rely on Medicare for LTC, as this program only covers acute needs and maxes out at 100 days. Medicaid, on the other hand, is a federal-state jointly funded program, which in New Jersey can pay for long-term care in a nursing home, assisted living facility, or at-home care, but only for those who can no longer care for themselves and who qualify based on income/assets. Working with a qualified elder law attorney, it may be possible to avoid impoverishing your family and protect a good chunk of your savings but still qualify for Medicaid.

The rules are complicated, but generally, in New Jersey, you may have no more than $2,000 per month income, and assets are capped at $2,000, other than a home (if your spouse is still living in it), plus a few other exceptions. It may be possible to receive some assistance with in-home health care or assisted living expenses with a slightly higher income level.

If you take other recommended steps before you need LTC—such as the transfer of your assets to heirs via a gift, life estate or irrevocable trust—Medicaid takes this into account. When you apply, any transfers made within the last five years will be counted among your resources, and you won’t be eligible if what you gave away plus what you still have put you over the limit. You’ll be responsible for covering any amount of your care costs until you’ve “spent down” to the eligibility limit.

LTC Insurance

Another option to consider in LTC planning is insurance. Depending on when you begin your planning, you may be able to secure an insurance policy that covers your future in-home or nursing home care costs at a fraction of the actual price, paying a monthly or annual premium. The best time to sign up for this coverage is well before you think you’ll need it, ideally in your early-to-mid-50s. You’ll need to be assessed as medically eligible, a threshold you’re more apt to clear when younger.

“The biggest problem I see with long-term care insurance is by the time people come to me, they’re probably uninsurable,” Friedman says.

That said, Friedman explains, “long term care insurance can make a lot of sense and provides the most bang for the buck for middle-income people. They probably can’t afford a lot of the costs of a nursing home if they don’t have long term care insurance, whereas you can if you have several million dollars. It can be an incredible financial hardship if you don’t have insurance.”

Many estate planning attorneys recommend a combination of Medicaid planning and LTC insurance for their clients as the best protection for their long-term care needs. It’s possible to secure an insurance policy to cover up to five years of care, allowing asset transfers to be made without fear of needing LTC before the end of the look-back period. After that, it could be determined if enough funds remain to continue the policy, or whether you would qualify for Medicaid.

“Policies should be priced based on what long term care costs are in your area and how much income you have,” Friedman adds.

LTC planning can be both complex and emotionally difficult, but the right attorney can help protect your hard-earned resources, health care security, and peace of mind.

New Jersey

Many estate planning attorneys recommend a combination of Medicaid planning and LTC insurance for their clients as the best protection for their long-term care needs.

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