The earlier you plan for your future, the better you will be able to protect your resources. The first steps are basic. Everybody needs three documents. They need a power of attorney, a last will and testament, and a living will, also called a health care directive.
Young people, if they have children, have to plan for the children if something happens to them. Older adults, if you are nearing retirement or at an advanced age the documents should be completed before the possibility of your facing a health crisis. Adult children should stress how important these documents are to their parents. When you have elderly parents who haven’t prepared, their health is failing and facing the possiblity of having to go into a nursing home, there is not much that can be done at that point to protect their assets. People do not always realize that their Medical Insurance and Medicare do not pay for a nursing home. Right now in New Jersey the average nursing home is approximately $9,000 per month.
Medicaid is the only program that will cover nursing home costs, but you have to “spend down” your assets to qualify for the program. A single person is only allowed to have $2,000. Married couples’ “rule of thumb” is that they have to spend down one half of their assets with the maximum they are allowed to keep $130,000. There are exceptions, and that is why it is best to talk to an attorney that is knowledgeable in dealing with the Medicaid application process. What most people don’t know is that Medicaid has a five year look back. That means any transaction done five years prior to your entering a nursing home is scrutinized by Medicaid.
There is also the issue of paying for your funeral. People feel that they have life insurance to pay for the funeral. What they don’t realize is that if the life insurance policy has a “cash in value” Medicaid counts this as an asset and you may have to cash it in with the proceeds going to the nursing home bill. The State of New Jersey has set up a program called “Choices” which is an annuity that allows you to prepay for your funeral. This is not considered an asset by Medicaid and your funeral expenses will be paid in the event you are forced to cash in your life insurance. When you are in a nursing home your pension and social security are used to pay the nursing home. From these payments you are only allowed to keep $50 per month for incidental expenses, haircuts, clothing, etc.
It is hard to face your death and the possibility of having to go into a nursing home, but “those that fail to plan, plan to fail.”
Kathleen Scott Chasar, Esquire, 903 Parkway Avenue, Ewing. 609-882-2200.
Attorney Kathleen Scott Chasar.,
