“I heard on the radio that I should create an Irrevocable Trust to protect my home from the nursing home taking it away from me.” This is a comment I regularly get from clients who wish to explore long-term care planning. I am happy to do so with them. I start by explaining that the nursing home will not take your home from you; it is only if you receive Medicaid benefits (the combined state and federal government benefits program for which you must qualify) to pay for your long-term care in a nursing home (or a few other situations) that Medicaid will require reimbursement for the care expenses they have covered. In that case, reimbursement comes from the sale of your home while you are alive or from your probate estate after your death.

Further, the long-term care options available to you are entirely dependent on your goals, finances and family dynamics, which may be completely different from others who have engaged in such planning. For instance, your goal may be to preserve the value of your home for your children and therefore you may be willing to transfer your home to your two responsible, unmarried adult children now. On the other hand, your sister has no children, and preserving her assets to benefit the next generation may not be a top priority when she could utilize those assets to pay for care for herself now. With this in mind, this article examines the benefits of planning to pay for long-term care yourself instead of anticipating the use of state benefits to pay for your long-term care in a nursing home.

1. Independence from State Benefits: Expecting to rely on federal and/or state-provided benefits such as Medicaid to pay for long-term care in a nursing home can be risky due to the unpredictability of government policies, and changes in the laws and regulations that govern eligibility for such benefits. By saving money to pay for your future long-term care independent of government benefits, you reduce the necessity of relying on government benefits and increase the possibility of having sufficient resources necessary to access quality care when you need it most in the future.
2. Freedom to Determine Residence and Care Opportunities that Best Suit You: Saving to pay for your own long-term care allows you to choose the type of residence and level of care that best suits your needs and preferences. Government benefits such as Medicaid do not pay for all types of long-term care, and in most cases pay for only nursing home care. Whether you opt for an over-55 residential community, in-home care, an assisted living facility or a nursing home, having your own funds gives you the flexibility to access a wider range of options tailored to your specific requirements. This ensures that you receive the level of care, comfort and social activities that align with your lifestyle and preferences, especially as they may change as you age.
3. Retain Funds and Gift as You Choose: One of the significant advantages of paying for long-term care yourself is the ability to retain control over your funds and allocate them as you see fit. Unlike qualifying for Medicaid benefits, which comes with restrictions on asset transfers and gifting, retaining your funds to access, manage and control yourself allows you to gift portions to loved ones or charitable causes during your lifetime if desired. This level of financial autonomy empowers you to continue to make decisions that align with your values and priorities.
4. Long-Term Care Insurance Policies to Pay for Your Long-term Care: In addition to saving funds to pay for your care out of your own pocket, you may also consider obtaining a long-term care insurance policy to provide an additional layer of financial protection. A long-term care insurance policy is a type of insurance that specifically pays for long-term care, whether that care is received in your home or at an assisted living facility or nursing home, depending on the terms of the policy. It essentially creates another “bucket” of funds you can draw from to pay for your long-term care, which decreases the funds you are paying from your personal accounts and thereby prolongs your ability to pay for your care yourself without having to qualify for government benefits to pay for needed care.
5. Flexibility in Determining Inheritance: By saving and paying for your own long-term care, you maintain the flexibility to determine how your assets will be distributed upon your passing. If you receive Medicaid benefits to pay for care, keep in mind that Medicaid is “first in line” to be reimbursed from your probate estate for any expenses Medicaid paid on your behalf. For example, your home that you intended to leave via probate to your brother at your death may instead need to be sold to reimburse Medicaid and your brother will only receive some (or none!) of the sale proceeds. By saving and paying for your own long-term care, you are better positioned to create a legacy according to your wishes. Whether you choose to leave assets to family members, friends, or charitable organizations, having control over your inheritance provides peace of mind and ensures that your financial legacy reflects your values and priorities.

In conclusion, paying for your own long-term health care offers numerous benefits that provide greater control, flexibility, and peace of mind compared to expecting to utilize government benefits, such as Medicaid. If you are concerned about planning for long-term care expenses, speak with an experienced elder law attorney who can guide you through a variety of considerations to assist you with determining the long-term care planning strategy that best suits you.

Attorney Abigail V. Poole is a senior associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is an active member and Immediate Past President of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). This article is written with the assistance of Chat GPT and is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.

April, 2024
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