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Norwood Estate Planning Lawyer > Blog > Elder Care > Report: Financial Ruin “Baked Into System” Due To Long-Term Care Costs (How You Can Prepare)

Report: Financial Ruin “Baked Into System” Due To Long-Term Care Costs (How You Can Prepare)


Recently, Kaiser Family Foundation (KFF) Health News reported that financial ruin is “baked into the system.” The core issue is that long-term care costs are eating away at the life savings of many people in the United States. It is a very challenging problem. At the same time, there are proactive

steps that people and families can take to prepare themselves. Here, our Norwood elder law attorney discusses the report, explains the risks, and highlights the steps that you can take to prepare your estate and protect your assets.

The Report: Astronomical Long-Term Care Costs Eat Away at Life Savings 

KFF Health News published a story called “Dying Broke” in 2023. It is part of a joint project with The New York Times about the high cost of long-term care in the United States. More than 4,000 people commented on the report. The readers discussed personal experiences with caring for loved ones and voiced concerns about their own future care needs. Critiques of long-term care insurance were common—with many finding it expensive and cumbersome yet necessary for peace of mind. Alarmingly, many people struggled to navigate Medicaid for long-term care coverage.

Dispelling the Myth: Medicaid Not Medicare Provides Long-Term Care Coverage 

Medicaid, not Medicare, is the program that provides long-term care coverage in the United States. While Medicare covers medical care for the elderly, it generally does not include long-term services such as nursing home care or in-home personal assistance.

Why does this distinction matter? All senior citizens can qualify for Medicare coverage. However, in contrast, only those with financial need can qualify for Medicaid. In effect, this means that many

people are required to “spend down” their assets before Medicaid will step in and provide financial coverage for long-term care costs, including an extended stay in a nursing home.

Proactive Strategies Can Help to Protect Assets From Long-Term Care Risks 

Proactive strategies are essential for protecting assets from the financial risks associated with long- term care. As healthcare costs rise and life expectancies increase, the likelihood of needing long- term care grows. Long-term care costs can potentially drain a person’s life savings. There are some estate planning options available to address the issue. Strategies include:

  • Obtaining private long-term care insurance coverage;
  • Early gifting to heirs (must be done at least five years before long-term care needs); and
  • Setting up a trust (must be done at least five years before long-term care needs).

The Medicaid five-year look-back period is a rule that reviews all asset transfers made by an individual within five years prior to their Medicaid application. The purpose is to ensure that applicants have not deliberately reduced their assets to qualify for Medicaid.

Get Help From Our Boston Long-Term Care Planning Attorney Today 

At Fisher Law LLC, our Boston estate planning attorney has extensive experience handling long- term care planning issues. If you have any questions about Medicaid (called MassHealth in Massachusetts) planning, please do not hesitate to contact our estate planning firm today for a completely confidential initial consultation. We provide estate planning and elder law services throughout the Greater Boston area.




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