As we observe National Elder Law Month this May, it is imperative to address a rapidly growing concern among American families: the rising cost of long-term care. With the increasing demand for such services and the financial burden it can entail, strategic planning is more crucial than ever. We know this may be a concern for you and want to both explore how to find the long-term care you or an aging parent may need in Alabama and also look into effective strategies to manage these expenses through legal and financial planning.
It begins with understanding the costs of long-term care. The cost of long-term care in the United States can be prohibitively expensive, varying significantly across different regions. On average, a private room in a nursing home now costs over $100,000 per year, with home health care also running into thousands of dollars each month. These costs are expected to rise due to factors like an aging population and increased healthcare costs, underscoring the need for advanced planning. In fact, you can look at the Genworth Cost of Care Survey for long-term care, using this tool here, and see what costs are in your city or zip code, as well as all of Alabama.
We find that when we are working with our clients and they need to navigate the complex landscape of long-term care effectively, there are several legal tools that are indispensable including:
Durable powers of attorney. It is crucial to establish a durable power of attorney to ensure there is a trusted individual, or agent, who has legal authority to make financial and health-related decisions on your behalf in times of crisis. This arrangement prevents unnecessary legal hurdles during urgent situations. This person can also be given the authority to apply for valuable public benefits to help afford care should the time come and this is needed.
Irrevocable trusts. For those who begin planning early, using an irrevocable trust can be a strategic approach to protect assets while preparing for long-term care needs. This type of trust shields assets from being considered in Medicaid eligibility determinations, but you must set it up at least 60 months before applying due to Medicaid’s look-back period.
There is never a wrong time to consult with an experienced Alabama elder law attorney to get answers to your questions. This is a vital step to ensure you are protected. Your elder law attorney can assist in developing a comprehensive plan that ensures quality care and a viable payment strategy, helping navigate both personal wishes and legal requirements effectively. At the heart of this conversation may be gaining access to key government programs and their benefits as well as your personal financing options such as:
Medicare. Mainly covers short-term care following hospitalization and does not typically cover extended long-term care needs.
Medicaid. Offers more extensive coverage for long-term care but requires meeting strict financial eligibility criteria. Your Alabama elder law attorney can provide invaluable guidance in structuring your finances to qualify when needed.
Long-term care insurance. This insurance helps cover the costs of long-term care services, filling gaps that Medicare and other insurances do not cover. Choosing the right policy involves evaluating coverage specifics, benefits, and costs.
Personal savings and retirement accounts. Using personal savings or retirement funds is a common strategy. Strategic planning is necessary to manage withdrawals effectively, considering potential tax impacts and financial sustainability.
Other financial products. Rental properties, annuities, and reverse mortgages are additional options that can be tailored to fund long-term care, each with specific benefits and considerations that your attorney can discuss with you.
Facing the rising costs of long-term care can be daunting, but with careful planning and expert guidance, it is manageable. This National Elder Law Month, take the opportunity to review or start your long-term care planning. An experienced Alabama elder law attorney can provide the expertise necessary to navigate this complex area, ensuring your plans are both effective and compliant with current laws.
We know this article raises more questions than it answers. We encourage you not to wait until it's too late. At the end of the day, legal planning is not just for you. Instead, it is for the ones you love most. If we can answer any questions for you on putting this estate planning in place, please do not hesitate to let us know. For more information, please reach out to our office and schedule a time to meet.