Asset protection from your health.
We read a lot about sexy offshore strategies for asset protection and they do make sense and we've completed about 30 of them with huge successes and testimonials. But what about when you get sick or ill as a senior and require nursing care?
Medicare does not cover long term are and Medicaid and Medi-Cal (Californians) must do a spend-down (SD) to where they are under the poverty line only to end up in a state funded facility. This is a tricky area where very good Elderlaw attorneys might be able to help but many times finding the right one at the right time will be difficult when an ounce of prevention would have been better than a pound of the cure.
California law allows the community spouse to retain a certain amount of otherwise countable resources available to the couple at the time of application. This is called Community Spouse Resource Allowance (CSRA) and it increases every year according to the Consumer Price Index. The current (2014) CSRA is $117,240.
Separate property will be counted in the total resources and subjected to the $117,240 limit. However, only non-exempt resources are counted in the spouses' combined, countable resources at the time of application for Medi-Cal. Thus, IRA's in the community spouse's name, household goods, personal effects, a car, the house, jewelry, etc. are all totally excluded, regardless of value, and the spouse remaining in the homee can retain these, as well as the CSRA of $117,240.
California law allows the community spouse to retain a minimum monthly maintenance needs allowance (MMMNA) of $2,931. This amount is adjusted annually by a cost of living increase. Under the “name on the instrument rule,” the community spouse may retain any income received in his/ her name alone. It is important to note that the $2,931 amount is a floor.
The recovery rules are getting stiffer and they are staffing up investigators to find out if someone has more than they presented in the application. Again, the best bet here is to hire a very good Elderlaw attorney when someone gets sick; assuming you can time such a thing. If you get caught with your pants down (surprised) as many people do then it is difficult to be honest in your application and not have it come back to recovery later on.
Here are the costs in Orange County, CA. and remember they are increasing both from inflation and just pure economic costs with all the upheaval from the Health Care Affordability Act so affectionately named Obamacare. 3 Represents the compound annual growth rate based on Genworth Cost of Care Survey.
We created a program called The Estate 8™ where after drafting, reviewing and analyzing thousands of estate plans we found that there were 8 disrupters that reached out again and again for every person it was just a difference in timing as to when it became urgent to solve.
One of the 8 is obviously nursing care as many folks already have a few problems and know it can only get a whole lot worse as they get older and the care for that problem could wipe out all the savings and legacy they have for their family.
As a former military man and tactician I always feel it is my responsibility to find a solution to a problem that invades my industry. Finally, after researching a few months I found it and it was supported by an A graded financial institution but I didn't even know as many advisers and consumers don't know.
I always find it a sense of purpose or duty when I find something I think is critically helpful to share it and that is why I'm providing this presentation to give you the big picture on a way to solve any despair you had about getting ill and that you could provide for the unexpected without throwing good money down the drain like with most traditional long term care.
- Who Needs Long-Term Care?
- An estimated 10 million Americans needed long-term care in 2000.2
- Most but not all persons in need of long-term care are elderly. Approximately 63% are persons aged 65 and older (6.3 million); the remaining 37% are 64 years of age and younger (3.7 million).
- The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older.
- By 2050, the number of individuals using paid long-term care services in any setting (e.g., at home, residential care such as assisted living, or skilled nursing facilities) will likely double from the 13 million using services in 2000, to 27 million people. This estimate is influenced by growth in the population of older people in need of care.
- Of the older population with long-term care needs in the community, about 30% (1.5 million persons) have substantial long-term care needs (three or more ADL limitations). Of these, about 25% are 85 and older and 70% report they are in fair to poor health.
- 40% of the older population with long-term care needs are poor or near poor (with incomes below 150% of the federal poverty level).
- The prevalence of cognitive impairment among the older population increased over the past decade, while the prevalence of physical impairment remains unchanged.
- Individuals 85 years and older, the oldest old, are one of the fastest growing segments of the population. In 2005, there are an estimated 5 million people 85+ in the United States.12 This figure is expected to increase to 19.4 million by 2050.13 This means that there could be an increase from 1.6 million to 6.2 million people age 85 or over with severe or moderate memory impairment in 2050.
It is miracle we are all living longer but the key is living longer while still healthy to enjoy it and that is a committed act with lifestyle, nutrition and activity that preserves the god-given right to this time you get to spend on earth.
However, we are likely to see millions of people need nursing care who might not have taken action to provide for themselves and would rely on the system which is going bankrupt and if they can provide a facility at all; would you want to be trapped there?