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Senior Citizen's Guide to South Jersey

Long-Term Healthcare Planning

As we look toward the future, we think in terms of all the good things we hope to enjoy, such as watching grandchildren grow up, enjoying retirement, and pursuing new adventures and experiences.  However, there's another side to growing older: the likelihood that we will need long-term care. In New Jersey, it can cost between $100,000 to $120,000 annually.

There are basically three choices as to how to pay for this care: your personal wealth, private insurance, or government programs such as Medicare, Medicaid, and Veteran's Benefits.  Families who choose to pay out of their private funds watch hard-earned assets rapidly become depleted.  While Medicaid is the primary government health plan for seniors, neither Medicare nor Medi-gap insurance policies cover long-term custodial care except in limited situations for a short period of time. However, Medicaid will cover nursing home care, if you meet stringent eligibility requirements.

Many people attempt to qualify for Medicaid by giving away their assets to loved ones or selling them for less than their actual worth. But, doing so may not make them eligible. The government scrutinizes all transfers made five years before an application for Medicaid is filed.

However, there are some strategies that will allow you to make gifts to those you love without going afoul of the law.  If you plan ahead, you can help preserve more of your wealth for your loved ones; however, assets preservation techniques may be available even after you have been admitted to a nursing home.  You and your family may want to consider consulting an elder law attorney when making decisions regarding long term health insurance planning.

What is an elder law attorney?

Elder law attorneys are attorneys who primarily work with the elderly and handle issues affecting the elderly. Elder law encompasses many different fields of law.  Some of these include Medicaid, Medicare claims and appeals, disability planning and estate planning. 

What role does an elder law attorney play?

An elder law attorney must be knowledgeable about both identifying and addressing the problems facing the elderly and disabled.  Issues that may be addressed include qualification for Medicare and Medicaid benefits, effective Estate Planning, substitute decision-making and the possible need for long term care for the disabled client. 
 
In the case of an elderly person whose health is declining or who has been diagnosed with a debilitating disorder, an elder law attorney should be contacted immediately. If an elder law attorney is contacted at an early stage, there are more available options.
An elder law attorney can be contacted either by referral from a trusted advisor or by a close review of credentials of the attorney.  You should consider the attorney's activity in professional and community organizations as well as other credentials.

What is estate planning?

Estate planning includes designing a plan, which provides for the disposition of assets upon your death.  The issues to be addressed are: (1) who will receive your assets and when, (2) who will handle the distribution of the assets and how this can all be accomplished at the least possible cost, and with the minimum amount of taxation.  A comprehensive estate plan will also provide for administration and protection of assets during your lifetime and will provide for decision-making in the event of your incapacity. 

Will Medicare pay for the cost of long term nursing care?

Medicare will pay for the cost of long term nursing care only if the following conditions are met: (1) the individual must be hospitalized for at least 3 days, (2) the individual must be admitted to a skilled nursing facility within 30 days of the hospital discharge, and (3) the reason for admission to the skilled nursing facility admission must be for the same reason/condition of the hospital stay.  If the person is able to meet the stringent requirements, the first 20 days may be paid in full, days 21-100 are covered with a $137.50 dollar per day deductible; however most patients do not qualify for the full 100 days. 

How do you qualify for Medicaid?

The most popular program that pays for long term care cost is the Medicaid program.
In order to qualify, an individual must meet both an income test and an asset test.  It is advised that those interested consult with a qualified elder law attorney to find out the rules in your state. 

What is the five-year look back rule?

The Medicaid office will look at transfers made to third parties without consideration within 5 years of the date of applying for Medicaid; however, a qualified Medicaid attorney may be able to obtain Medicaid coverage on your behalf even if transfers were made within the 5-year period.

What is a General Durable Power of Attorney?

A General Durable Power of Attorney is a written document whereby you authorize someone to act on your behalf.  A General Power of Attorney allows the individual to make financial decisions on your behalf within the parameters of the powers enumerated in the Power of Attorney.  A Durable Power of Attorney remains effective after the onset of a disability.

Can someone with Alzheimer's disease sign a power of attorney?

It depends on the stage of the disease. An attorney may wish to obtain a medical statement from the client's physician concerning the mental capacity of the client.

If they cannot sign Power of Attorney, what happens?

Unfortunately those who do not sign a Power of Attorney while they have capacity, have lost control as to who will take care of their affairs if they are unable to do so themselves.  An individual seeking to manage someone's affairs must retain an attorney to begin a court proceeding.  The attorney will prepare a Guardianship petition.  The duties of a guardian are to care for the ward and to maintain adequate financial records.

What is a trust?

A trust is basically an agreement between you (the grantor or trustor) and a trustee (which can be either an individual or an entity), which is made during your lifetime.  The trust agreement determines how assets placed in the trust will be managed and distributed. There are a variety of reasons that people establish trusts such as asset management, asset protection or to minimize the estate tax.

A common trust is a revocable living trust which is a will substitute.  It contains provisions regarding asset management and disposition of assets upon death.  A revocable trust will not protect assets from a nursing home. Another type of trust is a testamentary trust, which is a trust that is funded only upon an individual's death.  Another technique is to establish an irrevocable life insurance trust, which may provide estate tax savings.  A special needs trust is a trust that is designed to provide funds to the beneficiary in such a way that the individual remains eligible for public assistance programs.  There are different types of trusts for different purposes and not everyone needs a trust.

What is a will?

A will is a legal document, which becomes effective only upon the death of the person who created the will. The will sets forth who will be the beneficiary and what share of the estate they will receive. The executor is also named.  Trusts may be established within the will.  It is very important to follow all legal requirements of the state in which it is executed when setting up and signing the will.

What are advance directives?

Any written instructions, recognized by the laws of the state in which you live (usually a Living Will or Health Care Power of Attorney) which appoints an individual to make medical decisions on your behalf.  The document may also describe the types of health care the individual wants or does not want if he or she is not able to make health care decisions.  The Health Care Power of Attorney (or proxy) and Living Will may be separate documents or may be separate parts of one document.  In a Living Will, you will state your preferences about medical care in the event that you are terminally ill or in an irreversible coma.  It can contain provisions regarding what should be done for pain relief and give directions regarding your comfort.

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