Planning for long-term care is critical to family stability
By Jodi Williams Special to the Acorn

Estate planning, wealth preservation and wealth transfer are three important elements to a sound financial plan. But planning for long-term care trumps the other three because without catastrophic healthcare planning, all of the estate planning, wealth preservation and wealth transfer is useless. There will be nothing to plan with because the money will have been spent on healthcare.

With a 50/50 chance that you or your spouse will require some form of nursing care at home, in an assisted living facility or at a nursing home, the odds are high that you will have to prepare for this eventuality. Healthcare costs are rising at rates two to three times the rate of inflation. It is not uncommon to see healthcare costs for a senior requiring care exceed $75,000 per year.

No one wants to think about death or disability, either in terms of themselves or a family member, but the failure to plan for such events can lead to unnecessary stress or expense.

Congress has enacted a law, the Deficit Reduction Act of 2005, that imposes punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage for nursing home care.

Among other provisions, the law extends Medicaid's "look back" period for all assets transferred from three years to five and makes those with valuable houses ineligible for Medicaid long-term care coverage.

It also shifts the start of the penalty period for transferred assets from the date of transfer to the date when the individual would have qualified for Medicaid coverage of nursing home care if not for the transfer. In other words, the penalty period will not begin until the nursing home resident is out of funds, meaning there would be no money to pay the nursing home for however long the penalty period lasts. Innocent gifts to grandchildren could, years later, result in extended periods without any longterm care coverage of any kind.

When it comes to sound longterm care planning, make sure you are working with someone that is certified in long-term care planning and has taken ongoing training to keep up-to-date on the changing benefits and tax implications as well as options currently in the market.

A certified longterm care consultant has completed a multidisciplinary course that focuses on the profession of longterm care planning. They know the right questions to ask in order to draft the correct plan for you and your family, and are aware that long-term care plans have many variables and are not "one size fits all."

Jodi Williams is a certified long-term care consultant with Folino Tax & Financial Network in Camarillo and a member of St. John's Healthcare Foundation Symposium Committee. Williams can be reached at (805) 482-4062.