I’m a veteran. Can I get help from the VA to help pay for long-term care at home or in a care facility?
If you are a veteran, the VA has benefits to help pay for care if you need it, at home, in assisted living or skilled nursing. The program that provides cash to you to help pay for those expenses is called the VA Pension with aid and attendance. The VA Pension with aid and attendance has three sets of rules. The first is, do you qualify on a relationship to the VA or to the military service? And by that, I mean, are you a veteran? Did you serve on active duty in a wartime period? It doesn’t mean that you had to be in a war theater, you can be or have been stateside the entire time; it doesn’t mean that you have to serve all of your time during that. In fact, all you had to do was beyond active duty at least one day during the declared wartime period. Those dates are readily available online if you need them. The other item on the Veteran issue is, were you honorably, or at least not dishonorably discharged from the military. Those are the criteria. If you’re not a veteran but your deceased spouse was a veteran, you may be able to qualify for spousal benefits under the same program based on your deceased spouse’s service in the military. So that’s the first set of criteria. The next is what your medical expenses are compared to your income? You have to have medical expenses that pretty much exceed your income. When I say medical, we are considering care expenses in most situations as medical. They just have to be unreimbursed. They’re unreimbursed and you don’t have enough money to pay for your medical expenses, then you’re going to be able to get some VA benefits to help. The third issue is whether or not you have enough savings to actually pay for your care. So they’re looking at what the VA calls net worth. If your net worth could be utilized to pay for care, then you are not going to qualify for this benefit. There are some additional rules that are going to be coming out soon, we believe. This is early in 2016; maybe by the mid-2016 we’re going to have some additional rules and of course, you’re going to be seeing a lot of that in the media. But come back to my website in the future and we may have additional rules having to do with VA.
Why should I consider long-term care planning when I’m doing my estate planning?
So estate planning is extremely important; that’s what’s going to happen to your stuff when you die. You want to protect it for your family, you want to make sure that it doesn’t have to go to probate and that it avoids the hassles and expenses that are associated with not doing good estate planning. However, long term care planning, if you’re fortunate enough to live to the second half of life and if you ever do need care for you as you age, is going to be more important at preserving those assets for your family against the cost of long term care. How do you preserve your family assets? You do some good long term care planning with a certified elder law attorney who can address not only where you’re going to get care, but how it’s going to be paid for and how to protect your assets in doing so, so that they go to your family, and that you have an estate to leave to your family.
Where will I get long-term care if I can’t stay at home, and how will I pay for it?
Long term care is provided sometimes at home, most people want to age in place in their own home. But today, we have some other choices. We have of course, the traditional nursing home, which mostly is called a skilled nursing facility today. But in addition to those, we have a whole industry that has grown up of assisted living facilities; in any particular community they may be called assisted living, they may be called memory units, they may be called board and care, or even what some people would call a six-pack. But there’re a lot of different places where you can get care. The nuclear home with the families of different generations are living together, where our parents got care, they never went to a nursing home except if they got really, really sick versus just needing a lot of care. That’s not today’s reality. Today, the younger generations don’t have the ability to be there to care for you. So you need to look at where are you going to get that care. The industry that’s growing the fastest is this assisted living facility level of care, and there’s a number of different varieties of those, but that’s where I think that the majority of people are going to go. The cost of assisted living depends on your community. So if you’re in my community which is Silicon Valley of California, it’s very expensive. Those assisted living could be anywhere from $4,000-$10,000 a month, depending on what you want, or up if you’re in a very high end community. So, while that’s the desirable level of care, it’s very much more home-like, it is still very expensive and so we need to figure out how we’re going to pay for it. Unfortunately in California, Medi-Cal which pays for about 60% of the patients in a skilled nursing facility does not cover assisted living. And so, there’s a tension of how do we get care in this setting which is the most desirable, and I think that most people need to plan for how are they going to privately pay. That doesn’t mean that you’re going to pay out of your savings account; it means how are you going to leverage money and plan for paying, put some money aside that’s going to be earmarked and multiplied through some kind of long term care investment to pay for care if you need it, while at the same time passing on to your family if you don’t need it for long term care. I think that’s where the industry’s going and that’s probably how most people are going to eventually pay for that level of care.
What does assisted living and nursing home care cost?
Assisted living is the level of care that is non-medical; it will assist someone with their basic activities of daily living which is the ability to feed yourself, dress yourself, toilet yourself, transfer yourself in and out of a chair, in and out of bed and incontinence. So if you don’t have the ability to do those several other activities of daily living or need assistance with them, that’s where assisted living is going to come in. In my area of California, which is the Silicon Valley, currently the cost is somewhere in between $4,000 and $10,000 for assisted living. Skilled nursing is a level of care where you need nursing care; you need medical care for some kind of a medical condition or maybe you have so many deficits in those activities of daily living that you need much higher level of assistance than assisted living can provide. In those situations, you’re going to need skilled nursing level of care. In my community, we’re looking at somewhere between $9,000 and $16,000 or $17,000 a month for skilled nursing coverage.
What’s the difference between medicare & Medi-Cal? Will medicare pay for a nursing home?
Medi-Cal is the California version of the federal Medicaid program, which is a public benefits program. It has to be financially needy in order to get Medi-Cal. Medicare is health insurance that an individual pays for along with the social security that they got deducted. So you’re paying for this health insurance in advance through payroll deductions and when you get to the point of being 65 years old, you automatically go on to this health insurance instead of whatever health insurance you have. Medi-Cal, as a public benefit, is only for individuals who either don’t have Medicare or who have Medicare, but it doesn’t cover everything, and that they cannot afford those other things that Medicare doesn’t cover. What does Medicare not cover? That is the biggest thing; it’s skilled nursing long term care. Now, Medicare does cover what I call short term care, that’s rehab in a nursing home if you break your hip or have a stroke and you need to go to the nursing home for some rehab, that’s called medical or skilled nursing care, but the long term care in a skilled nursing facility is not covered by Medicare, while it can be covered by Medi-Cal if the in individual qualifies for Medi-Cal. Again, Medicare is health insurance, Medi-Cal is the same thing as Medicaid and that is a public benefit that pays for things Medicare doesn’t cover.
What does Medi-Cal cover?
Medi-Cal covers the things that Medicare as a health insurance does not cover. It can cover co-payments, it can cover deductibles, it can cover long term care for an individual in a skilled nursing home. Medicare will cover the short term in a nursing home. That means rehab, such as if you break a hip or have a stroke, whereas if you can’t leave the nursing home after the end of your therapy, then you may need to stay there for a long term care, that will be covered by Medi-Cal if you can qualify for it. Again this is a public benefit; you have to be financially needy.
Will I lose my house if I need medi-cal?
Medi-Cal has different rules. There’s a rule for eligibility, there’s a rule for what your share of cost or co-payment will be, and then there’s a set of rules for recovery. Basically, your home is protected if you intend to return there. I always tell people, if you got well, however improbable that might be, but if you did get well, would you go home, or would you stay at the nursing home? Universally, everyone says, well of course, I would go home. So you always intend to return home. It doesn’t have to be feasible that you really will, just, would I go home if I could? Yes. In that situation, your home is protected, and it is also protected if your spouse or a minor or disabled child is living in the home. So, it can be exempt for eligibility purposes can you get on to Medi-Cal. Share of cost is about your income; it has nothing to do with your home other than if your home is rented, then you need to count the rent from it, less the expenses of the home, such as mortgage or insurance and taxes and such, towards your co-payment for the nursing home. But most of the times, that’s not a big concern for most individuals. But what many individuals do not understand is that when you die, if you do not leave a spouse or disabled or a minor child, the state wants its money back. It lets you keep it for eligibility because the state wants you to be able to go home, they don’t want you to be trapped in the nursing home that they’re paying for you. So when you die, they are willing to now take the money out of the value of your home if you still own it when you die, and they call that recovery. So if you want to protect your home so it goes to your family, mostly you need to be protecting it against the state’s recovery.
My spouse has Alzheimer’s and is living at home. What do we need to do now to plan ahead?
You have my sympathy if your spouse has Alzheimer’s. You’re probably working really hard; matter of fact, the Alzheimer’s association has said that 80% of the time, the at-home well spouse caring for an ill spouse with Alzheimer’s; the well spouse is going to die first. So first let me say good for you that you’re taking care of your spouse but you need to be able to take care of yourself, too. If you pre-decease your spouse, who’s going to be looking after that spouse when they’re in a facility? So, beyond that, you need to be thinking about where can my spouse get care, if it’s not going to be from me? Am I going to be able to bring in-home caregivers into the home, should my spouse be in an assisted living or a dementia or memory care unit, where they can be made safe? Those expenses can become pretty great, so we need to plan ahead for how are we going to preserve the ability to take care of your spouse while making sure that you’re not literally killing yourself in doing so, without help.
Is it too late to do anything if my loved one is already in a nursing home?
If your loved one is already in a nursing home, it is not too late in California to still do some long term care planning. We have the most liberal eligibility rules of any state in the United States. So you need to look for a Certified Elderly Law Attorney to go over your specific situation and see if you can protect your assets and provide for some care. Though the care or some benefits through, say Medi-Cal or some VA benefits to pay for them. But yes, you should absolutely consider connecting with an elder law attorney for some help.
If I’m healthy, what planning should I do now?
If you’re healthy and planning ahead, this is the right time to plan ahead. You have the most options of anyone. If someone’s already in a nursing home we’re in a crisis, and we have very few options. But if you’re healthy, you can look at how do I protect my assets, how do I leverage my assets? So I maybe never have to go on public benefits on Medi-Cal and to be cared for. Where can I be cared for and how am I going to arrange for the cost of that? But yes, if you are still healthy, you don’t need care yet, this is the right time to be making decisions and getting some pre-planning done so that you never end up in a crisis.
Am I already protected if I have my assets in a trust?
Asset protection for long term care will involve estate planning, planning for putting assets into trust of one’s order or another, and protecting them for passing on to the next generation or to your other loved ones. But it also needs to involve how are you going to protect them in case you need long term care. If we’re looking at planning for long term care, a regular, revocable living trust, which is the garden variety trust that many, many, many people in California have, and which you might see a lot of different seminars on, is going to do nothing to protect you in case of long term care. The kinds of trust that are used for long term care planning are irrevocable trust. Even irrevocable trusts have to be very carefully drafted. There are many issues besides qualifying for long term care, there is tax issues, there is income issues; lots of different issues that these kinds of trust need to provide for. The kinds of trust that are done in other states for Medicaid planning which is Medi-Cal in California, are not necessarily the right trust for California. You need to talk to a Certified Elder Law Attorney in California to get good advice about what kind of trust you need. But again, a regular living trust, which is probably the kind of trust you already have, is not sufficient to protect your assets.
What’s a powerful power of attorney and why is it so important?
Most people who come to me to review their documents have a power of attorney that was probably provided to them by their estate planning attorney. Most of these powers of attorney are what I call the statutory power of attorney; you may have seen it. It’s the one with all of the boxes down the side or the middle of the page and it says check at the bottom if you want to give all of those powers. That’s a very weak power of attorney. When I talk about a powerful power of attorney, I mean a power of attorney that’s going to be effective for your family to do long term care planning for you, if you have lost capacity and you haven’t done it for yourself yet. Those powers of attorney need several different provisions in them that are not ever in the statutory power of attorney. Now, that doesn’t mean that your attorney could have added a bunch more provisions with your statutory form, but if all you have is a statutory form, you do not have these other powers that you need. My powers of attorney are 26 pages long, so they are very comprehensive. They are also designed in our current environment with the financial institutions not liking to take powers of attorney; they don’t trust them. And these are powers of attorney that spell out every bit of powers that you have, so there’s no guesswork. That’s what I call a powerful power of attorney and that’s what you need for long term care planning and if you become incapacitated in the last part of your life.
How do you advise people who say “Long term care insurance is too expensive!”?
When someone says that they have not bought long term care insurance, I’m never surprised. In fact, only about 10% of individuals over 65 have long term care insurance. The longer you wait to buy it, the more expensive it is. Of course if you buy it younger then you spend more money over the long run for it. So it is an expensive insurance. It is sold through insurance companies that are basically health insurance oriented. And there’s no guarantee that a traditional long term care insurance, because it is through the medical insurance or health insurance portion of the rules and the laws is not going to go up on their premiums that the policy will even stay there or what in fact is going to cover. It’s not the same as an insurance product or contract through a life insurance or a company that’s going to offer annuities or life insurance. But traditional long term care insurance is expensive; it could go up and you don’t know if it will be there when you need it. So many people don’t want to buy it. It’s also been resisted… many people resist buying it because if they don’t use it, they lose the investment. Now we all do that with the fire insurance on our houses which could be a major loss to us, but the cost of long term care is almost like losing your home to a fire, so why shouldn’t you have it? The fact is, more people, or a higher percentage of people are out there who age are going to need long term care, than will ever have a house fire. So it’s much more important but nevertheless, people don’t want to buy it. So is there an alternative? Yes. The government wants us to get some coverage for our long term care and so there are new investment products that are being made possible through the pension protection act which was a federal act in 2006, which is just now really rolled out and become available through the life insurance companies. Not all life insurance companies offer these, so you need to talk to someone who is connected with the elder care planning with long term care through life insurance and annuity products as an investment. These investments pass on to your family if you don’t need them for long term care, a much more palatable kind of arrangement for most people. But yes, I understand and I agree that traditional long term care insurance is expensive and may not be the best a desirable or palatable investment.
What is the difference between long-term care planning and traditional long-term care insurance?
Long-term care planning is really a planning using public benefits; it looks at your financial products that you might have bought, your investments, it looks at your legal documents. And, so, it’s planning with all of those pieces put together and with the issues of where do you want care? How is that the various care… will the various care options out there be available to be paid for by public benefits or VA benefits. So, we need to look at all of the options. That’s long-term care planning. Long-term care insurance is merely insurance that’s going to pay for care based on the contract terms, where it pays for it, and how much it pays per day. That’s just one tool in a good thorough long-term care plan.
How do you advise people who say, “I’m never going into a Nursing Home,” or “I’m never going to need long term care!”?
Saying that you’ll never need long term care, or never will go into a nursing home is… what do they say? Denial is a river in Egypt. So that’s not really realistic. In fact, a huge percentage of people do need care at some point in a skilled nursing home. Are they going to stay there for very long? Maybe not, but depending on what you’re unlikely enough to pass away from, you may end up in long term care in a skilled nursing or assisted living for many, many, many years. Most people come to me are in that position and, hopefully, they’ve done some planning, but unfortunately oftentimes we’re in a crisis and we’re looking at no planning having been done, and very few options. So I’m hoping that you will think about this and not stick your head in the sand as the ostrich does, and do some planning ahead of time. If you don’t need it with the new investment products, the funds will pass on to your family. So it’s not realistic and it’s not a prudent thing to do to just say this will never happen, but plan for it in a fiscally prudent way.