Watching older parents struggle with advanced age can be very difficult for their adult children. Adult children worry about their parents’ quality of life and day-to-day safety. They may also worry about their ability to afford crucial services as they rely more and more on outside professionals for basic elements of daily life. As those who may have once maintained large houses and traveled regularly start downsizing, families often start to worry about their economic stability.
What typically happens with the resources of older adults when they move into nursing homes or otherwise downsize their living arrangements?
Planning can preserve many resources
The money, real estate and personal property of older adults can all be vulnerable when they move into nursing homes. They might try making certain financial moves at the last minute, but they could then be subject to significant financial penalties.
All too often, older adults are unaware of the limits of Medicare coverage. The basic medical insurance available to retired adults is often inadequate for those who need to move into nursing homes or who require in-home nursing support. The sooner older adults and their families start planning to ensure they qualify for Medicaid to pay for that care, the less likely they are to be at risk of penalties.
Typically, those seeking Medicaid benefits are subject to a five-year or 60-month lookback period. Planning by changing the ownership of assets or transferring resources into trust reduce the chances that families have to worry about a Medicaid penalty. Gifts and transfers can lead to the state requiring older adults to pay for their own care for months, even if they have to liquidate all their remaining resources.
Even if the penalty is a concern, late-in-life planning is more beneficial than doing nothing, especially when considering estate recovery efforts. After a Medicaid recipient dies, the state makes a claim against their estate seeking repayment for the benefits paid on their behalf.
Even the home where an older adult lived which does not prevent them from getting benefits could be at risk after their death. The assets that children and other loved ones should have inherited can end up going to the state to pay for the care they received before their passing.
Adult children who worry about their parents’ support needs and finances may want to have difficult conversations with their parents as soon as possible. Planning to cover care costs early can help people avoid scenarios in which their parents cannot obtain crucial benefits or the state takes actions that undermine the instructions they leave in their wills. Families that address the gaps in Medicare coverage by planning for Medicaid can potentially help to protect vulnerable older adults.