How to Protect Parents’ Money from Nursing Home?

It is essential to protect money from nursing home costs because if you do not take steps to ensure assets are safe, a nursing home can result in crippling financial loss. Nursing home costs thousands of dollars every single month. It is not covered by Medicare or most private insurance providers except in minimal circumstances, such as when skilled nursing care is required. In the vast majority of cases where custodial care is needed — which means help is needed for routine activities of daily living — Medicare and private insurance policies provide no coverage. 

If your parents are getting older, you should be aware of the limitations of Medicare coverage. If your parents do not have an asset protection strategy in place, they may find themselves in a scenario where they must spend their whole life savings on nursing care bills. It may risk their financial security and any legacy they wish to leave. 

What Are Nursing Home Costs? 

Nursing home costs vary widely across Canada. In 2016, the average cost of a private room in a nursing home was $9,261 per month, and the average cost of a basic semi-private room was $7,108 per month.

Several factors can affect the cost of nursing home care, including the type of facility, the location, the level of care required, and the length of stay. Medicaid and private insurance can help cover the cost of nursing home care, but out-of-pocket costs can still be high.

There are several ways to finance nursing home care, including private pay, government assistance, and long-term care insurance. Private pay options include using savings, selling assets, or taking out a reverse mortgage. Government assistance programs like Medicaid can help cover nursing home costs, but eligibility requirements vary by state. Long-term care insurance is another option to help finance nursing home care, but it is essential to understand the coverage and limitations before purchasing a policy.

Nursing home costs can be a significant financial burden, but there are several ways to finance care. It is essential to understand all options and make the best decision for your situation.

Why Is There a Need to Protect your Parent’s Money from Nursing Home Costs?

Following are the reasons to protect your parent’s money from nursing home costs:

• To ensure that your parents can live comfortably in their retirement years without worrying about the cost of long-term care.
• To help your parents preserve their hard-earned savings to pass on more of their wealth to you and future generations.
• To prevent your parents from becoming a burden on you financially if they should require long-term care.
• To give your parents peace of mind knowing that their money will be there for them if they need it to cover the cost of nursing home care.
• To help you avoid the financial burden of paying for your parent’s nursing home care yourself.
• To ensure that your parents’ money is used for their care and not for the benefit of the nursing home.
• To protect your inheritance from being depleted by the cost of long-term care.
• To keep your parents’ money in the family rather than having it go to the nursing home.
• To avoid the probate process and the potential for estate taxes.
• To give you peace of mind knowing that your parents’ money is safe from nursing home costs.

What Are the Ways to Protect your Money from Nursing Home Costs?

There are several ways to protect your money from nursing home costs:

Purchase long-term care insurance- Long-term care insurance policy can help cover the cost of nursing home care. It is important to note that this type of insurance does not cover custodial care, but it can help with the cost of skilled care. 

Create a trust– A trust can help protect your money from nursing home costs by placing the assets in the trust and naming a trustee to oversee the distribution of the funds. The trustee can be given discretion to decide how to use the assets in the trust, which can help ensure that the money is spent on care rather than being used up by nursing home costs. 

Give assets to children- One way to protect your money from nursing home costs is to give assets to your children. It can be done through a gift or by setting up a trust. However, it is essential to note that this may have tax implications. 

Move assets into an irrevocable trust- An irrevocable trust is a type of trust that cannot be changed or canceled once it is created. It can be an excellent way to protect your money from nursing home costs because it allows you to remove the assets from your ownership. However, it is essential to note that this may have gift tax implications. 

Stay healthy and avoid the need for nursing home care altogether- Of course, the best way to protect your money from nursing home costs is to stay healthy and avoid the need for care altogether. It can be done by maintaining a healthy lifestyle, staying active, and keeping up with routine doctor visits. 

Use Medicaid planning strategies to protect your assets- Medicaid is a government program that can help pay for nursing home care. However, it has strict asset limits. Medicaid planning is a process of structuring your finances to allow you to qualify for Medicaid coverage while still protecting your assets.

Spend down your assets on qualifying medical expenses- One way to protect your money from nursing home costs is to spend your assets on qualifying medical expenses. It can include in-home care, assisted living costs, and long-term care insurance premiums.

These are just a few ways you can protect your money from nursing home costs. It is essential to consult with a financial planner or elder law attorney to discuss your options and find the best solution for your situation.

Conclusion

Nursing homes can be an excellent place for aging parents, but they can also be costly. It’s essential to protect your parent’s money as much as possible by researching and asking the right questions before you decide where your loved ones will live in their later years. This article outlines five essential questions when considering a nursing home for your aging parents.

We hope this article has been helpful. If you have any further questions, please don’t hesitate to reach out to us. We’re here to help in any way we can.