In my last blog we met Jerry, whose family hired me to analyze his financial situation so they could plan for when his long term care insurance benefits ended in two years.  Jerry, 75, was living in his own condominium, but required 24-hour care due to a variety of medical issues. I researched four housing options for him, and presented scenarios to the family so they could begin the discussions that would eventually lead them to make an informed choice. These are the options we reviewed:

1. Stay in condo and get a reverse mortgage to pay for in-home care through an agency.  There are several types of reverse mortgages and guidelines on the kinds of properties that qualify. We learned that in order to qualify for a reverse mortgage, a condo needs to be FHA approved, and the approval process is time consuming. In Jerry’s case, his building didn’t qualify at the time, so we took this option off the table. Given that qualifying criteria often changes, however, this could be an option in the future.
2. Stay in condo and spend down all his assets in order to qualify for Medicaid. Medicaid “spend down” is what some people do when they have too many assets to qualify for Medicaid. There are strict guidelines around this – the “look-back” rule, which establishes penalties for gifts and other transfers of property made for the purpose of qualifying for Medicaid. In 2006, Congress increased the “look back” period from 3 to 5 years as part of the Deficit Reduction Act. It’s up to each state to implement the rule. The best strategy is to hire an elder law attorney  who specializes or has deep experience in Medicaid Planning to help with this.
3. Sell the condo and move to a local assisted living facility. Jerry lives in the Bay Area where the cost of a good assisted living facility can run as much as $80-100K a year, depending on the level of care needed. Although the average stay in an assisted living facility is 22 months (59% move into a nursing facility, 33% pass away) it’s important to factor additional time and cash needs into the planning process.
4. Sell the condo and move to an assisted living facility near one of his children.  Jerry has one child living in Boston, the other in Portland, Oregon. The cost for an assisted living facility in Boston and other large metropolitan areas is about the same as the Bay Area. In Portland, however, the costs are about 80% of those in the Bay Area.

I facilitated a conversation based on the facts above with Jerry’s family when they were all in town for Father’s Day.  We then reviewed the various scenarios I presented to them with their Financial Planner. After considering all the options, they decided to hire an estate attorney to do the Medicaid Planning while they shop for an appropriate assisted living facility in the Portland area. Because the family is planning ahead and using available resources to help them in the process, the transition will be easier for Jerry and for his family.

It’s important to note that everyone’s situation is different. The “right” answer may change over time and coming to that answer involves many conversations.  Keep in mind that what works for Jerry may not be the case for you and your family. If you need help planning long term care for yourself or a loved one, please feel free to contact me.