Update: The implementation date for the "look back" has been extended from July 1, 2021…
If you decide to move to an Assisted Living residence, there are key issues you need to think about besides whether they have good food, a nice view, or enjoyable cultural activities. Here’s why planning is crucial:
- Assisted Livings are expensive – in the New York area, they can cost $60,000 to $100,000 a year or more. You will need to pay privately. Do you have enough?
- If you run out of money when you are at an Assisted Living, you will have to move out. Very few assisted living residences will permit you to stay if you use up your assets. Maybe your children could pay for you – but do you want to put that burden on them?
- If your health deteriorates, and the Assisted Living can no longer provide the care you need, they may require you to move out. You may agree that you need care – or you may want to stay in the environment you’ve come to know. There may be a workaround, if you can hire an aide to help you, but that doesn’t always work. If you need more care, where will you go?
- If you need to move out of the Assisted Living for either of the above reasons, would it be possible for you to live with a child or another family member?
- In the near term, when you are at the Assisted Living, and in case you move to a nursing home, have you done as much as you can to protect your assets, so that they last as long as possible?
Let’s touch on these questions.
- If you have $100,000 in savings, and the equity in your house is worth $300,000, and you have Social Security and other income each year of $30,000, how long will your money last? If the Assisted Living you choose costs $75,000 per year, and your other living expenses cost $50,000 per year, you will blow through most of your life savings in just a few years. Doing some serious financial and Elder Law planning before you decide where – or whether – to move to an Assisted Living could save you heartache down the road.
- Would the Assisted Living really kick you out if you ran out of money? The answer, unfortunately, is ‘yes.’ Assisted Livings are for-profit companies, and they need to make money to stay in business. A friend of mine, Executive Director of an Assisted Living, told me, “Those are very uncomfortable conversations.” (Do you think?)Again, financial planning or Elder Law planning would be very much worth your while. Delaying your entry into the Assisted Living could also save you money.
- Where would you go if you needed more care? The Assisted Living may have a nursing home associated with it that you like. Or, there may be a nursing home you like in a location that is good for you. Checking in advance to see where you could go, if you could no longer stay at the Assisted Living, would ease your mind, if it turns out you need more care than they can provide.
- It’s worth thinking about whether you could move in with a child or relative. Sometimes that can work out well. I know people who live in two-family houses, or children who want to have their parent near them. If you are solo and have a solo sibling, that can sometimes work as well. Perhaps between your family member and an aide, you can be taken care of in a home environment.
- Protecting your assets: In New York there are steps you can take to access Medicaid, and the earlier you plan, the better. Many people do not realize that New York has two types of Medicaid, with different rules: Community Medicaid and Institutional (nursing home) Medicaid. Community Medicaid does NOT have the five-year look back that applies when you want to enter a nursing home.
a) There are some Assisted Living residences in the New York area that take Medicaid. They are very much worth considering. Community Medicaid can pay for the Assisted Livings that take Medicaid.
b)Even if you don’t go to an Assisted Living that takes Medicaid, planning ahead can be key to your financial future. You may be able to structure your assets so they can pay for your Assisted Living, and further on, will minimize or eliminate any nursing home Penalty Period associated with the five-year look back.