Boston College Finds Comparative Rip-Off in LTCi Costs

Study Finds That Elderly Americans Have Some
Tough Financial Issues to Consider

BOSTON, MA–(Marketwired – Dec 23, 2014) – Although the United States has come a long way in terms of health insurance reform and medical care, older Americans are still finding it difficult to manage their personal finances with regard to long-term care. According to the Certified Medicaid Planner Governing Board, the ongoing demographic shift in the U.S. has made single senior citizens the largest segment of American society (1). This happens to be the segment more likely to require long-term care services such as nursing homes, assisted living facilities and home-based health care.

Long-term care is expensive. In early 2014, a report by PBS NewsHour indicated that a private room in a nursing home facility could cost more than $94,000 per year (2). Due in large part to this significant amount, many Americans choose Medicaid to provide them with long-term care. In fact, a 2014 study issued by the Center for Retirement Research (CRR) at Boston College determined that more than 70 percent of elderly Americans plan to let Medicaid cover their long-term care needs (3).

Insurers have become hesitant

Although a long-term insurance industry has emerged in the U.S. since the early 21st century, insurance providers have become hesitant to issue more private policies due to their high costs and expensive premiums; in fact, long-term care is poised to become a political issue in future elections (4) as Medicaid looks for more funding to run its programs, which are currently demanding heavy expenditures as the American population continues to age.

Given the high cost of private long-term care insurance (3), it is not surprising to learn that older Americans prefer to rely on Medicaid when it comes to satisfying their nursing home and assisted living facility needs. There is, however, a considerable financial sacrifice to make in this regard: The Medicaid spend-down provision.

“Medicaid benefits are not usually given much thought, but more than 12 million Americans are in need of long-term care,” explains Rocco Beatrice, Managing Director of Estate Street Partners, LLC. “As the Boston College study indicates, more than 40 percent of Americans who celebrate their 65th birthday will need long-term care services, particularly nursing homes. Since we are a population that is aging rapidly and living longer, we may as well get used to talking about financial planning in terms of long-term care.”

Estate Street Partners operates UltraTrust.com, a renowned website dedicated to asset protection and financial planning. To further clarify the Medicaid spend-down provision and long-term care, Mr. Beatrice explains: “Aging is not the only trigger of long-term care needs: there are also chronic disease and disabilities to consider. Whenever our health deteriorates to the point that we require assistance with meals, personal hygiene and getting dressed, we have reached the point of needing long-term care. At this time, the long-term care insurance industry is in a state of flux, which is why so many Americans consider Medicaid instead; however, many of them are not aware of the spend-down provision.”

Mr. Beatrice continues: “In essence, the spend-down provision means that Medicaid will not place you in a nursing home until you have nearly depleted your assets. You have to use up your money until a satisfactory level is reached. For a couple, this means about $3,000 in cash and not too much in the way of property. Medicaid does not want you to be poor as a pauper before they can admit you to a nursing home, but they certainly do not want you to have too many assets either. Some people set about paying off their debts in order to qualify for long-term care through Medicaid, but there are better ways to do this.”

At this time, the long-term care insurance industry is in a state of flux, which is why so many Americans consider Medicaid instead

Now that long-term care is becoming a major financial issue for most Americans, Mr. Beatrice offers the following advice: “One of the secrets to good financial planning is to get it done well in advance. If we look at the current statistics on aging, we see that many Americans are starting to go into nursing homes after age 65. You obviously do not want to start spending down at that age; in fact, you probably wish to be able to have some savings and enjoy some assets from that nest egg you worked so hard to put together.

In conclusion, Mr. Beatrice explains: “It essentially works like this: As a grantor, you create and fund a trust that transfers all your funds and assets to a legal entity that is professionally managed under your instructions. This means that you can instruct the manager to allow you to enjoy assets from the UltraTrust® without interference from Medicaid. In this fashion, you can effectively enjoy long-term care benefits from Medicaid without having to spend down your assets, but this must be planned and executed well in advance of when you might need a nursing home. For this reason, early planning is essential.”





About Estate Street Partners (UltraTrust.com):
For 30 years, Estate Street Partners has been helping clients protect assets from divorce and frivolous lawsuits while eliminating estate taxes and probate as well as ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call (888) 938-5872 to learn more.
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1. Certified Medicaid Planner Governing Board, November 8, 2014 –link
2. PBS NewsHour, January 15, 2014 – link
3. Boston College Center for Retirement Research, November 1, 2014 – link
4. McKnights, December 19, 2014 – link