Estate Planning for Healthcare Costs in Retirement

Elder Care

AARP has released a study that estimates caregiving costs for families in the United States will total more than $520 billion annually. This estimate reflects the time and resources devoted by families and not skilled workers; the skilled worker estimate runs over $640 billion. If not planned for properly, families who take on the burden of caring for a loved one might lose their own income if caregiving responsibilities require time away from work.

Aside from family-provided care, trends reported earlier this year show that many Americans are opting not to use nursing home services and instead rely on in-home care providers. Whether a family member anticipates private care costs, a nursing home, or family care, crafting a comprehensive estate and financial plan can help to provide a cushion for future medical expenses. Here are three items to address when revising one’s estate plan:
1. Health care cost estimate. Online calculators can help individuals to assess projected expenses for healthcare later in life. These calculations use age, lifestyles, health conditions, and inflation to provide a probable figure for future medical costs. For example, a 65-year-old woman with high blood-pressure who retires in 2014 might have annual medical expenses ranging approximately from $5,300-$9,200. A healthcare assessment may also be completed by a physician and reviewed with a financial planner. Obtaining an estimate in advance helps individuals to structure assets and plan prudently for a financially comfortable retirement.
2. Medicaid Trust. Medicaid Trusts preserve assets for designated beneficiaries (not the grantor) while at the same time allowing the grantor to preserve eligibility for Medicaid benefits. Medicaid imposes a 5-year ‘look-back’ period, which means it is in an individual’s best interest not to apply for Medicaid until five years after a Medicaid Trust has been funded.
3. Long Term Care insurance. Married couples who planned to rely on each other for care during retirement might divorce or suffer a spouse’s death. (Some surviving spouses might inherit their partner’s debt. Our Chapel Hill estate planning attorneys address this issue and others to consider when estate planning for unmarried seniors.) Individuals experiencing these circumstances should revisit their long-term care plan and create a new one. Long-term care insurance in North Carolina operates under several mandates of the North Carolina Department of Insurance, which our attorneys review at the previous link.
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