Sometimes you know the time is approaching, and other times the hospital calls and says discharge is tomorrow and they cannot return home by themselves. Scary business.
No matter how much time you have to prepare and choose a provider for home care or facility care, it is going to be expensive. Most people run out of funds and end up on a government program called Medicaid. Medicaid is a payer of last resort and they check to be sure you are completely out of funds before they take over the bills.
A single person must spend down everything, car, home, checking, savings, IRA, 401k, CD’s, investments, etc. until there is less than $2000 remaining before Medicaid will take over the bills. You must also cash in life insurance as well to receive Medicaid.
So who will pay for the funeral? Your heirs will pass the hat to pay this bill instead of receiving anything left over at death. Sad, but true. There is one strategy left by Medicaid though, and fortunately there is no cost to make use of it.
Medicaid will allow you to set aside up to $15,000 for funeral expenses if this money is put into an irrevocable burial trust account. That means the money can only be used for funeral expenses. If you do not do move some of your money to an account like this before it is gone – spent for care, your heirs will be on the hook for your funeral bill.
Married people get a bit of a reprieve. The at-home spouse can retain use of the house, one car, and some savings and income (a single person only gets a $45/month allowance from their Social Security check). The at-home spouse gets to use these things until death, when they all go back to the state of Wisconsin to repay Medicaid for what they spent on the other spouse’s care. Your children will likely get nothing.
Both of these problems can be fixed with the irrevocable burial trust. It is simply a bank account with a trust company that you transfer some of your money to before it is all gone. Medicaid allows you to keep this account and use the money to pay for your funeral expenses. The account earns interest, just like your bank pays now. So it is a do this or lose everything situation. Medicaid typically does not offer up this information to you. If you do not know about this, you lose.
You can also set up these trusts (no more than $15,000 each) for each of your children and each of their spouses as well. This gives you the chance to choose between spending all the money on care, or, moving some to your family. Where do you want to leave your things to?
You can see a short video on how this works on the home page of my website, www.TheLongTermCareGuy.com Scroll all the way to the bottom of the page and you will see the video. Then call us at (920) 884-3030 to learn more and take care of this. Helping you take care of long-term care situations is all we do. Family meetings happen here all the time and there is no cost to advise and help you prepare.