The Costs of the Rising Cost of Long-Term Care

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Young woman embraces her senior mom and kisses her on the forehead.Do you have a family member who is receiving some form of long-term care? If you don’t, the chances are good that someday you will – and that day may not be too far away. As the U.S. population ages and life expectancies increase, the need for long-term care is becoming an important consideration for many individuals and families.

Long-term care refers to a range of services and support one may need to meet their personal care needs over an extended period. This type of care may be available in a person’s home, at an assisted living facility, or at a nursing home. These services can range from help around the house to 24-hour care in a nursing home or memory care unit.

Though the cost of long-term care varies widely across the United States, it has been rising and will continue to rise. According to Genworth Financial, the current average cost of a private room in a nursing home is $108,405 per year.

Long-Term Care Payments or Retirement Savings?

A recent survey conducted by The Harris Poll on behalf of Nationwide asked 1,334 U.S. adults 28 years old or older about balancing caregiving obligations and their long-term financial situations. Results revealed that many adults are sacrificing long-term financial well-being to give or pay for long-term care for parents or other loved ones.

Some people leave good-paying jobs to take lower-paying jobs with more flexibility so they can care for loved ones with long-term care needs. This can derail a person’s career and cost them a significant amount of earning potential in the long run. Other people may be able to keep their full-time jobs but pay out-of-pocket expenses for which they will never get reimbursed. The Harris Poll/Nationwide survey found that people pay an average of $338 per month for caregiving expenses.

The survey also found that more than half (56 percent) of respondents said they are willing to borrow from their retirement accounts to help pay for long-term care for a loved one. Borrowing from a retirement account can drastically reduce the account’s ability to generate enough funds for retirement. Nearly half (43 percent) of the survey’s respondents are concerned that caregiving expenses will keep them from retiring.

Long-Term Care Planning

Though the cost of caregiving can have a significant effect on a family’s finances, only 17 percent of the survey respondents said they have discussed long-term care and its costs with a financial professional. Of the adults surveyed, 30 percent said that their financial professional has not brought up the subject of long-term care planning with them.

According to Holly Snyder, president of Nationwide’s Life Insurance business, long-term care planning is often a complicated and emotional process and can have a significant effect on a family’s financial well-being. Nationwide’s data show that Americans would benefit from being more proactive with their financial planning, especially with regard to planning for long-term care costs.

Long-Term Care Insurance

A good way to plan for the costs of long-term care is to invest in long-term care insurance. Long-term care insurance (LTCI) is a type of insurance designed to cover the costs of long-term care services. Individuals with LTCI usually have more options for the type of care they receive and where they receive the care. Having long-term care insurance can also reduce emotional and financial stress on families, since they know that proper care will be accessible when it is needed.

Unfortunately, too many Americans are not taking full advantage of strategies to help them manage and mitigate long-term care costs, such as LTCI. According to the survey, only one in five adults said they have long-term care insurance. Of those who have not purchased this type of insurance, nearly half (49 percent) said the perceived high cost of the insurance was a deterrent.

The Cost of LTCI

The cost of long-term care insurance varies widely based on several factors:

  • Age and Health: Premiums are generally lower if you purchase a policy at a younger age and when you are in good health.
  • Gender: Women typically pay more than men because they tend to live longer and are more likely to need long-term care.
  • Marital Status: Married couples often receive discounts on their premiums.
  • Benefit Amount and Duration: The cost is influenced by the daily or monthly benefit amount you choose and the length of time benefits will be paid (for example, three years, five years, or for a lifetime).
  • Elimination Period: This is the waiting period before benefits begin. A longer elimination period usually reduces premiums.
  • Inflation Protection: Adding inflation protection increases the premium but ensures that benefits keep pace with the rising costs of care.

The cost of long-term care insurance can also vary significantly depending on where a person lives. This can add another challenging factor when people begin to think about purchasing a long-term care insurance policy. According to the survey, people often overestimate the cost of LTCI. When the survey participants were presented with a sample of an LTCI policy, 20 percent guessed the policy cost more than $500 per month when, in fact, the policy cost $130 per month.

According to Forbes, the average annual cost of long-term care insurance in the U.S. in 2023 was $1,200 for a 60-year-old man and $1,960 for a 60-year-old woman. The cost is lower for younger individuals and higher for older individuals.

Seek Expert Advice Before You Purchase an LTCI Policy

Long-term care insurance offers a way to safeguard against the high costs of long-term care, providing financial protection, choice, and peace of mind. However, it’s essential to carefully consider the cost, benefits, and your unique circumstances before purchasing a policy. Consulting with an elder law attorney, financial advisor, or insurance specialist can help in making an informed decision tailored to individual needs and financial situations.

Contact an elder law attorney Add Goff today to talk further about your options for affording long-term care. He can walk you through the options that may be available to you and help you understand the benefits and costs.

 

For additional reading on long-term care and how to pay for it, check out the following articles:

Medicaid Spend Down: Pay for More Than Just Medical Bills

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Senior man uses smartphone at home.Since the 1960s, Medicaid has provided health care coverage for low-income people across the United States. For millions of seniors, Medicaid offers financial assistance, helping them to cover the cost of long-term care services. Today, this joint federal-state program also benefits other qualifying populations with limited income, including children and people with disabilities.

Qualifying for Medicaid

You may not foresee yourself applying for Medicaid in the future. Yet in reality, research shows that roughly one in seven seniors are likely to require long-term care at some point later in life. Long-term care can be extremely costly; this is why many people have come to rely on the Medicaid benefits that cover these costs.

Given these sobering statistics, consider gaining a better understanding of Medicaid and shaping your plans sooner rather than later. To qualify for Medicaid, you may need to carry out certain actions at least five years prior to when you apply. That’s because most state Medicaid agencies will look back at the five years leading up to when you submit your application for the program.

If you happened to make certain purchases or gifts during this so-called “lookback” period, you could end up facing a penalty. Unfortunately, these penalties could mean you have to wait months, or even years, before you become eligible for Medicaid.

Medicaid is for people living on limited incomes. So, among the main criteria to qualify for Medicaid is that you have limited income and assets. Generally, you must have no more than $2,000 in your name to be eligible for this public benefits program. (Note that this limit can vary according to state, however.)

If you have more than that, you may find yourself having to “spend down” your extra assets to meet the $2,000 limit. Only after you have fulfilled this (and other) requirements would Medicaid begin paying for basic long-term care expenses.

The upside, however, is that not all your assets count against you in the eyes of Medicaid. For example, your primary home is typically exempt. You also can own one car without worrying about exceeding Medicaid’s asset limits. And, depending on your state, you may be able to spend your excess money on certain items that help make your life more comfortable.

Medicaid Spend Down

As mentioned above, each state dictates what the income and asset limits are for Medicaid applicants. These figures also tend to shift a bit every year. 

Take note that not every state allows for a Medicaid spend down. These so-called “income cap” states follow different rules.

Also, take care that items you do decide to buy as part of your spend down are specifically for the Medicaid applicant.

So, What Can You Pay For?

All that said, Medicaid applicants can generally spend down their excess income in several ways. Paying off credit card debt or medical bills is one possibility. Prepaying for your funeral services is often a legitimate spend down option, too. Admittedly, these sorts of payments might not bring you much enjoyment, but they still may be able to count toward your spend down amount.

In many cases, you can spend down your surplus assets on medical services, equipment, or health insurance premiums.

Perhaps you have come to rely on a wheelchair or cane or could benefit from hearing aids. You may want to have an eye doctor check your vision. If your prescription eyeglasses are out of date, you may be able to purchase a new pair. These are all medical expenses that could potentially be part of your spend down efforts.

At the same time, your excess income can go toward much more than unpaid medical debt or other bills. Purchases that help improve your quality of life tend to be permissible. Here are five tangible types of items you may be surprised to find you can legally purchase as part of your Medicaid spend down:

  • A new vehicle – You may need a reliable car or a wheelchair accessible vehicle to get to medical appointments. Keep in mind that some states place a limit on the value of your one vehicle. For example, you might not want to plan on purchasing an RV camper for road trips if you are seeking Medicaid assistance.
  • Electronics – In some states, upgrades to your smartphone, laptop, television set, or another communications device may be a possibility.
  • New clothes – It might be an ideal time for you to stock up on new socks, pajamas, or other clothing necessities.
  • Books or subscriptions – Sources of entertainment can boost your quality of life, too. You may prefer books or magazines, or subscriptions to streaming services like Netflix.
  • Towels and bedding – Check with a professional to see whether you can refresh your bedding or towel supply as part of your spend down. If moving to a long-term care facility, ask whether they provide these types of items for you.
  • Furniture – You may be moving to a facility that allows you to bring along certain preapproved furnishings. For example, you might benefit from a recliner chair with a power lift in your new space.
  • Home improvement – Even if you’ll receive long-term care at home, you might be able to spend your excess income on modifying your residence. Maybe you need to invest in fixing your plumbing, paving your driveway, or installing a wheelchair ramp.

Consult with your attorney to understand what is and is not permissible. (A bonus is that you may in fact be able to include legal fees as part of your spend down process.)

Why It’s Key to Work With Your Elder Law Attorney

The rules regarding Medicaid get complicated quickly. Be sure to talk to your elder law attorney about Medicaid planning. Discuss your needs with them and ask what your options might be for spending down your assets. They can identify strategies to help preserve your hard-earned savings while avoiding potential Medicaid penalties.

Whatever you do choose to purchase, keep all your receipts and detailed documentation in case any questions come up. You don’t want to break the rules by accident and end up facing a Medicaid penalty period.

Retirees: Deduct Your Long-Term Care Insurance Premium

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Even if you have a long-term care insurance policy, you may likely be hoping that you won’t ever have reason to use it. Regardless of what the future holds, there’s one silver lining of which you may not be aware. That is, premiums on many long-term care insurance policies are in fact tax-deductible.

What Is Long-Term Care Insurance?

Long-term care insurance, or LTCI, can help you prepare for covering the cost of care in a nursing home facility or other setting when and if you need it. Unfortunately, the likelihood that you’ll need long-term care services at some point is high. In fact, about 70 percent of older adults find themselves having to rely on at least some long-term care in their later years.

When individuals require long-term care, it means that they need assistance when completing activities of daily living (ADLs). These basic daily tasks include dressing oneself, showering, or moving safely from one place to another in one’s household, such as from the bed to the bathroom, or in and out of one’s chair. In most cases, your LTCI policy will begin covering long-term care services if you cannot perform at least two ADLs on your own.

The cost of LTCI policy premiums can be out of reach for many people, and some insurers have been raising premiums over the course of time. According to one 2022 survey by HCG Secure, a mere one in 10 of Americans older than 65 have a long-term care insurance policy. However, if you have purchased a tax-qualified plan, you may be able to deduct the insurance premium as a medical expense.

Is My Long-Term Care Insurance Policy Tax-Deductible?

You can deduct numerous types of medical and dental expenses from your taxes. In addition to qualified long-term care insurance premiums, other deductible health expenses include the following:

  • prescription medications and insulin
  • substance use disorder inpatient treatment or smoking-cessation programs
  • prescription or reading eyeglasses
  • contact lenses
  • hearing aids
  • X-rays
  • artificial teeth
  • acupuncture treatments
  • the cost of caring for a guide dog for a person with a vision or hearing disability

When filing your 2023 federal income taxes, check with your insurance broker or state insurance commission to determine whether your LTCI policy qualifies.

Only certain long-term care insurance policies meet the criteria for a tax deduction. The National Association of Insurance Commissioners sets these rules. Typically, many hybrid long-term care policies do not qualify for a premium deduction. (For more information on what defines a qualified LTCI contract, consult the IRS’ Publication 502 for the current tax year.)

If your policy does qualify, you can deduct your LTCI policy premium up to a specified limit. Keep in mind that you will only be eligible for a tax deduction if all of your eligible medical expenses totaled more than 7.5 percent of your adjusted gross income for the year.

Select states also offer LTCI tax incentives, so be sure to check with your tax advisor. Note, too, that if you are self-employed, the rules regarding these deductions can differ.

How Much Can I Deduct in 2024?

If your annual LTCI policy premium is higher than the limit provided in the table below, it will count as a medical expense. The older you are, the higher your deductible limit. For example, if you are a 75-year-old individual at the end of 2023, you may be able to deduct up to $5,880 in LTCI premiums as qualified medical expenses.

Table 1. 2024 LTCI Tax Deductible Limits.
Attained Age Before the Close of 2023 Maximum Deduction in 2024
Age 40 or younger $470
Age 41 to 50 $880
Age 51 to 60 $1,760
Age 61 to 70 $4,710
Age 71 and older $5,880

These are lower deduction limits than in previous years. The Internal Revenue Service adjusts these limits each year.

The cost of long-term care services can in large part depend on where you live. Check out this online tool to get an estimate based on your ZIP code.

The ins and outs of LTCI products can prove to be complicated. Consult with your attorney; they can provide guidance on purchasing an LTCI policy and also assist you in planning for the possibility that you will need long-term care in the future.

Getting Help When Providing Care at Home for Aging Parents

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Home health care aide serves a hot meal to an older adult in his home.As they grow older, your parents may prefer to continue living in their home rather than moving to a long-term care facility. They are not alone in this; more than three-quarters of adults over the age of 50 say they would prefer to age in place. If your parent can safely live at home on their own with your support, you may wish to seek some form of outside help. Fortunately, you have a number of options to explore.

Home Care Services for Seniors

Public as well as private agencies offer a variety of home care services for older adults. These may include the following:

  • Home health care, either part-time or 24 hours a day
  • Personal care and homemaking services, such as shopping, cooking, and cleaning
  • Services delivered to the home, such as meal programs, transportation, and home repair
  • Money management
  • Respite care service programs that provide unpaid family caretakers with a periodic break

Other Community and In-Home Support Options

The Program for All-Inclusive Care of the Elderly (PACE) is another initiative locally available to qualifying individuals. PACE provides services through adult health centers in different communities, with additional in-home support available.

More than 2,000 adult day care centers nationwide also offer such services as physical therapy and social support.

Medicare and Medicaid Home Health Care

Home care can cost far less than nursing home care. A growing number of states are therefore striving to provide services to older adults who wish to remain in their homes. Medicare and Medicaid are two programs that provide some coverage of the medical portion of home health care.

Coverage can often prove inadequate, however. Medicare will cover home health care services if you qualify. Meanwhile, Medicaid home care services vary widely from state to state.

If you have an older loved one who wants to age in place, you may need to combine Medicare or Medicaid with other resources.

Of the thousands of private home care agencies operating nationwide, about half are Medicare or Medicaid certified agencies. If Medicare or Medicaid cover the services these agencies provide, these programs will reimburse for these services. Such certification also means that the agency has met certain minimum federal standards regarding patient care and finances.

Private accrediting organizations can also certify home care agencies. The two major accrediting groups for home care agencies are the Community Health Accreditation Partner and the National Association for Home Care & Hospice.

Non-medical services are available to help older people remain independent as well. The Older Americans Act funds more than 10,000 senior centers and gives grants to states and Area Agencies on Aging to provide services for aging adults. Such services include Meals-on-Wheels, transportation, respite care, housekeeping and personal care, money management, and shopping. Services are usually free, but you may face waiting lists or staffing shortages, depending on where you live.

To find an Area Agency on Aging program near you, visit the Eldercare Locator or call 1-800-677-1116. In many cases, these agencies may offer case management and coordination services as well.

Support Though a Geriatric Care Manager

The profession of private geriatric care managers has evolved to help coordinate services for seniors. Geriatric care managers usually have a background in social work, nursing, or psychology. They offer expertise in helping older people and their families arrange for various kinds of long-term health care. They also help evaluate an older person’s needs, review available options, and monitor the older person’s care.

To find a geriatric care manager in your area, visit the website of Aging Life Care Association.

Additional Resources

As you navigate the options for home health care, reach out to your attorney. They can assist in long-term care planning, navigating Medicare and Medicaid, and finding ways to help cover the costs.

For further information on home care options, be sure to check out the following resources:

Websites

What You Should Know About Prepaid Funeral Plans

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Mourner holds lillies in one hand and places the other on a casket during a funeral service.How Much Are Funeral Costs in the United States?

Funerals rank among the most expensive purchases many consumers will ever make. As of 2023, the median cost of a traditional funeral, with casket and burial, was $8,300.

The average cost varies depending on where you live as well. Data from 2024 shows that average funeral costs (for burial or cremation) are highest in the following seven states: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Any “extras,” like flowers, death notices, acknowledgment cards, and limousines, can bring the total to well over $10,000.

The process of organizing a funeral or celebration of life for someone else is an overwhelming and emotional one. Many people consider a funeral or burial a reflection of their feelings for their deceased family member or friend. As a result, they may tend to “overspend” on these services.

Planning Your Own Services

Today, an increasing number of people are planning their own funerals or memorial services. They may also designate their funeral preferences in detail and sometimes even pay for funeral ceremony in advance.

In part, they may pursue a prepaid, or “pre-need,” funeral plan to help relieve their family members of the financial burden. They also do this to offer them some peace of mind. With plans already in place, their loved ones can forgo certain decisions amid their grief, when they’re likely also overwhelmed with other pressing tasks.

Prepayment for funeral services can serve as an effective Medicaid planning strategy, too. For example, you may be looking to apply for Medicaid and need to spend down your assets to qualify for the program. Opting into a prepaid funeral contract can help you do this.

In addition to burial or cremation costs like caskets, urns, or burial plots, you may be able to include other expenses in your prepaid funeral plan. This can vary, but may include:

  • transportation to a cemetery for your family members
  • floral arrangements
  • gravesite services
  • catering
  • services of a funeral director

What to Look Out for When Prepaying for Funeral Services

However, consumers lose millions of dollars every year when pre-need funeral funds are misspent. A funeral provider could mishandle, mismanage, or embezzle the funds. Some go out of business before the need for the pre-paid funeral arises. Others sell policies that prove to be virtually worthless.

In the 1980s, consumers received some protection from unscrupulous funeral providers with the creation of the Funeral Rule. Under this rule, the Federal Trade Commission (FTC) requires funeral providers to give consumers accurate, itemized price information and other specific disclosures about funeral goods and services.

Unfortunately, the Funeral Rule does not apply to many of the features of pre-need contracts that fall under state law. Plus, protections vary widely from state to state. Some state laws require the funeral home or cemetery to place a percentage of the prepayment in a state-regulated trust or to purchase a life insurance policy with the death benefits assigned to the funeral home or cemetery. Other states, however, offer buyers of pre-need plans little or no effective protection.

The FTC recommends exploring several aspects of a pre-need funeral arrangement in detail before you sign up. Consult with your attorney on these ideas before signing anything. The following come from tips the FTC shares on its Shopping for Funeral Services consumer advice page:

  • Ask what will happen to the money you will spend on a prepaid contract. States have different requirements for handling funds paid for prearranged funeral services.
  • Get information on what happens to the interest income on the money you prepaid and put into a trust account.
  • Determine whether or not you’ll have any protection if the firm you dealt with ever goes out of business.
  • Can you cancel the contract and get a full refund if you change your mind?
  • You may move to a different area or pass away when you are away from home. Determine whether someone can transfer your prepaid funeral plan if necessary. (This is often possible at an added cost.)
  • In addition, get details on exactly what you are paying for and compare this with other funeral providers.
  • Confirm that the price you are prepaying is final. You want to avoid anyone having to owe additional money to cover funeral expenses once you’ve passed away.

Communicate With Your Loved Ones

Of course, you can avoid many of these pitfalls by making decisions about your arrangements in advance, but not paying for them in advance. Either way, tell your family about the plans you’ve made and also make them aware of where you’ve filed the pertinent documents. You may also wish to consult your attorney on the best way to ensure that your family members follow through on your wishes.

If you’re just beginning to do your research and compare prices, connect with trusted loved ones on funeral homes they may recommend. See if one of them would be willing to join you when you make visits to different homes.

Consider a Payable on Death Account

To guarantee money is available to pay for your funeral, work with your bank to set up a payable-on-death (POD) account. (Note: Not all states offer POD accounts as an option.) Name the person who will be handling your funeral arrangements the beneficiary (and make sure they know your plans).

With a POD account, you will be able to maintain control of your money while you are alive. Then, when you pass away, it is available immediately to the beneficiary, without having to go through probate.

You be interested in exploring other potential options for prepaying, such as final expense insurance (also called burial insurance). Your insurance provider or your estate planning attorney can help you identify a suitable policy.

What Else to Keep in Mind

In some cases, it can be more convenient and less stressful to “price shop” funeral homes by telephone or online, rather than in person. The Funeral Rule requires funeral directors to provide price information to anyone who asks for it.

If you have questions about your state’s laws, most states have a licensing board that regulates the funeral industry. Your estate planning attorney also has the expertise to help you with planning and to guide you on your rights.

Are You a Family Caregiver? New Bill Seeks to Lower Costs

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Elderly woman with dementia smiles with middle-aged caregiver daughter at home.Recently proposed legislation seeks to offer financial relief for unpaid family caregivers. Introduced in November 2023, the Lowering Costs for Caregivers Act of 2023 is the result of a bipartisan effort to lessen the costs of family caregiving. The American Association of Retired Persons (AARP) has also endorsed the bill.

If the act becomes law, it would amend the Internal Revenue Code to allow medical bills that you pay for your parents to count as qualifying medical expenses for health flexible spending arrangements (FSAs) or health reimbursement arrangements (HRAs). This would include health expenses for one’s parents as well as parents-in-law.

Flexible Spending Accounts

Flexible spending accounts and health reimbursement accounts allow individuals to set aside pre-tax money to pay for qualifying medical expenses. For HRAs, only employers provide funding, while both employers and employees can fund FSAs.

Under the current law, the funds can only go to the account holder’s medical expenses, as well as expenses for their spouses and dependents. It does not allow people to use their accounts to pay for their parents’ medical care.

By allowing use of FSAs or HRAs for parents’ health expenses, the Lowering Costs for Caregivers Act aims to help reduce some of the costs of caregiving.

The Financial Cost of Caregiving

The proposed legislation addresses the ever-increasing costs facing the 38 million unpaid family caregivers in the United States.

One 2021 survey by AARP revealed the economic toll of caregiving. Unpaid family caregivers spend an average of $7,200 per year on caregiving expenses. Over three-quarters of caregivers report incurring routine out-of-pocket costs. Caregiving-related spending consumes more than a quarter of unpaid caregivers’ annual income.

When family caregivers provide financial support for their aging parents, more than half of these funds typically goes to housing. Housing expenses that caregivers help with include rent, mortgage payments, and assisted living fees.

In addition, adult children serving as caregivers might help cover costs associated with modifying parts of their parents’ home. Older individuals who develop mobility challenges often need changes to their homes to continue living there safely. For example, someone using a wheelchair may need ramps. Others may need bars installed on the walls and in showers to help prevent slips and falls.

Medical costs are also significant. The caregivers in AARP’s survey spent an average of more than $1,200 annually on health care expenses, comprising one-fifth of their spending. They supplied direct payments to health care providers, hospitals, and therapists. They also paid for medical equipment and devices, in-home care, and adult day care programs.

Those who must balance working full- or part-time jobs with caregiving – roughly six in 10 caregivers – faced increased financial strain. When caregivers struggled to manage employment and their duties at home, the yearly average they spent on caregiving increased to $10,525.

How Caregivers Can Reduce Expenses

While the financial cost of caregiving is often substantial, several strategies can help you save money as a caregiver.

By claiming a parent as a dependent, you can receive a credit on your income taxes. For 2023, the maximum tax credit is $500. To be eligible for the credit, your parent, step-parent, or in-law must not make more than $4,700. You must provide more than half of the financial support for the parent in a calendar year. So, you could qualify if you are the primary caregiver and source of financial support.

Another strategy to reduce the economic toll of caregiving is helping your loved one apply for federal and state benefits, such as Supplemental Security Income (SSI). SSI is available to people with limited income and resources who have a disability, are blind, or are 65 and older. Participants receive a monthly benefit, which helps to cover such costs as food and shelter. If your aging loved one lives with you and receives SSI, you could charge them rent, which could help cover your household expenses.

Multi-generational living can also reduce costs for your family. Consider having a loved one who lives in assisted living or alone move in with you. This could reduce your loved one’s housing costs and your loved one could contribute to your household expenses.

Finally, when strategizing how to reduce the financial weight of caregiving, it can be extremely beneficial to have an advocate on your side. Working with your elder law attorney. They can help you create a successful and manageable caregiving plan for your loved one.

Do Caregiver Duties Help Older Women Live Longer?

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Older woman cares for her senior husband at home who uses a wheelchair.Despite the considerable level of stress that can come with serving as a unpaid caregiver, a new study now suggests that taking care of a loved one may in fact lead to increased longevity among older women.

The findings, published in The Journal of the American Geriatrics Society, revealed that women who said they were taking care of a loved one on a regular basis had a mortality rate 9 percent lower than that of non-caregivers over the course of the study.

While the study did not find a direct connection between caregiving and reducing risk of death, its authors describe the association as robust. As they point out, the existing literature about the health impacts of caregiving has been contradictory. Research in this area will therefore need to continue exploring the potential connection between reduced death rates among women who choose to take on caregiving responsibilities – as well as the reasons why this may be the case.

Women and Caregiver Responsibilities

Today, more than 35 percent of caregivers in the U.S. are age 65 or older, with caregiving services mostly undertaken by older women.

This study followed nearly 160,000 women aged 55 to 79 over roughly 20 years. The participants took part in two assessments 10 years apart.

The data was collected as part of several clinical trials focused on prevention of major chronic conditions in older women. However, the assessments included questions on caregiving. Participants were asked about whether they were actively providing caregiving aid to a loved one and, if so, how many hours they dedicated to the service weekly. About 41 percent of them reported serving in a caregiver role anywhere from less than once to more than five times a week.

The women also provided information on a number of other factors, including depressive symptoms, race, living status, smoking, and history of cancer, diabetes, cardiovascular disease, and hypertension.

Results

The women who reported being a caregiver over the two assessments showed not only a 9 percent lower death rate from any cause than those who were not caregivers, but also a lower risk of death from cancer or cardiovascular disease. This proved to be the case no matter how frequently they reported performing caregiver duties. Other factors, including how old the women caregivers were or whether they lived alone, likewise did not appear to affect this result.

Need for Further Research Regarding Caregiving and Decreased Death Rates

Caregiving remains a critical need and will continue as Americans grow older and live longer. Currently, 10,000 people in the U.S. are turning 65 years old each day, according to AARP.

The Centers for Disease Control and Prevention (CDC) has identified caregiving – whether paid or unpaid – as a major public health issue. Because caregiving is such an expensive service, many older people rely on family members to stand in the gap and provide their care. The resulting burden on family caregivers can include burnout, lost wages, and a lack of support.

“The burden of caregiving demands and their influence on health will be substantial in coming years,” co-author Michael J. LaMonte of the University of Buffalo-SUNY said in a news release. “[It] is an increasingly important focus in epidemiologic research,” he adds.

Learn More

If you are serving as a family caregiver or are considering taking on such a role, be sure you do your research. You may not be aware of all the duties involved and could find help through various resources.

If you’re unsure what kinds of assistance may be available to you or your loved one, connect with elder law attorney Addison Goff of Ruston, Louisiana. He may be able to determine what programs you qualify for as well as how to pay for services. Visit www.GoffandGoffAttorneys.com or call 318-255-1760 to schedule an office visit or Zoom conference to learn what’s best for you and your loved ones. 

 

Medicaid Planning Protects Your Home

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Multigenerational family has breakfast in yard on a sunny day behind modern home.Your most valuable property may be your home, which is true for many people. You likely want your children to inherit that value when you pass away.

However, you may also have concerns about planning for the future, especially if your health declines and you need expensive long-term care. You may be aware that Medicaid can pay for these services. However, Medicaid rules say you can own no more than around $2,000 in assets to be eligible – now what?

Medicaid Planning Using an Irrevocable Trust

One solution is to take your home out of your name while reserving your right to live in it. This is possible with a carefully drafted irrevocable trust.

Putting the house in the ownership of a trust could prevent Medicaid penalties and ensure reimbursement of health expenses. (Note that each state’s rules can vary.) It all depends on whether your health continues to keep you out of long-term care for the next five consecutive years.

An irrevocable trust has numerous other advantages, one of which is to avoid probate proceedings. Trusts are private agreements that usually require no court supervision. So, signing away valuable property can feel like a major step, but it keeps your living situation unchanged and can pay off in the long run.

Avoiding Capital Gains Taxes

But suppose you later decide to sell the house and move into a smaller place. That could pose a capital-gains tax problem. If the trust hasn’t been carefully drafted, and it (not you) sells the home, the personal residence exemption would be lost. Capital gains tax could be prohibitive if the house has appreciated in value since the date of purchase.

A similar problem arises when it comes time for your children to inherit. If the trust is not carefully drafted to cover this eventuality, your heirs will lose the basis-adjustment tax break, which could cost them dearly. The basis adjustment allows the inherited value of the home, for capital-gains purposes, to be calculated not from the date you originally purchased the home but from the date your heirs inherit the property.

For example, imagine you paid $100,000 for your house in 1980, and you kept it in good condition; when you pass away, the house is worth $300,000. Now suppose the home is titled in the trust name, but the trust wasn’t written carefully to preserve the basis adjustment that would otherwise be allowed for inherited property. If the children sell the home for $350,000 in those circumstances, they would have made a taxable profit of around $250,000.

With the basis adjustment, however, profit would be calculated from the $300,000 mark as of the date of inheritance. This would leave your children with a tax bill on the $50,000 profit, not $250,000. This tax advantage comes from “stepping up” the taxable basis to the market price at the time of inheritance. As a result, your family receives more value by having to pay less taxes.

Protecting Your Assets for Heirs with an Irrevocable Trust

First, the irrevocable trust takes the home out of your name and, instead, titles it to the trust. Medicaid rules view the owner of the property as the trust, not you, and that’s why you want to reduce your assets and qualify for Medicaid assistance.

Next, to preserve the personal residence capital-gains exemption, an irrevocable trust creates what’s known as grantor trust tax rules. Current tax rules allow property owned by this kind of trust to remain part of your estate for tax purposes and exempt from capital gains up to specified value limits, depending on your state and whether you file single or jointly as a married couple.

Even though the trust has ownership, you are still allowed to take the personal residence exemption. For capital gains, the IRS disregards the trust. However, as of 2023, assets transferred to an irrevocable trust before your death that are not subject to estate tax will not receive a step-up in basis.

To minimize your heirs’ exposure to capital gains tax in the future, the trust also provides a limited testamentary power of appointment. The appointment power permits you to designate someone with the authority to disburse your assets to chosen beneficiaries, provided those beneficiaries are limited to family or charities.

The limited power of appointment may allow your assets to pass down to beneficiaries while preserving eligibility for both the tax basis adjustment and Medicaid. (There is never any guarantee of this tax treatment, and you should always consult with your tax advisor for tax advice — your elder law attorney can point you to a CPA if you don’t already have one.)

The right estate planning strategies neatly solve Medicaid planning and tax issues by:

  • Transferring the house title to the irrevocable trust while retaining your right to live in it, avoiding Medicaid penalties or reimbursement problems after five years
  • Creating grantor trust status to preserve the residence exemption, avoiding capital gains tax on the sale during your lifetime
  • On your death, the adjusted-basis tax break is preserved by designating a person or entity to administer the assets in the trust

Trusts are carefully drafted to comply with current rules regarding ownership and taxes to prepare for Medicaid eligibility and protect your assets for your family.

Consult With Your Estate Planning Attorney

You may have a will, but it will not be able to protect your assets unless it becomes part of an estate plan that includes an irrevocable trust.

You may already have a will or estate plan in place but want to have a professional review it. Your estate planning attorney may find that your will or estate plan isn’t Medicaid-qualified, or that it lacks provisions for a grantor trust or the necessary powers of attorney. However, this is not a reason to worry, as an irrevocable trust can be changed.

Trusts that fail to account for various contingencies can happen if you don’t know where to find a trusted and reputable estate planning attorney. Many states have passed legislation permitting the alteration of trusts for tax reasons, even if the trusts are nominally irrevocable. All parties must consent, or court proceedings would be required, but an expert estate planning or Medicaid planning attorney knows how to correct these problems efficiently.

Contact estate planning attorney Addison Goff today. You may visit GoffandGoffAttorneys.com or call 318-255-1760 to set up an office visit. 

A Senior’s Guide to Estate Planning

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Happy senior couple meets with an estate planning attorney.Most older adults acknowledge that estate planning is essential. Yet, nearly half of Americans age 55 or older do not have a will, and even fewer have designated powers of attorney, a living will, or health care directives.

These legal documents help guide your representatives to provide the end-of-life wishes you seek. Estate planning also reduces the burden your loved ones face and lessens the potential for conflict among your family members after you are gone.

Whether you own a little or a great deal, every senior should have an estate plan. Your estate comprises your home, real estate, vehicles, businesses, bank accounts, life insurance, personal possessions, and any debt you may owe. The goals of your estate plan include:

  • Establishing who will receive your assets upon your death
  • Setting up a durable power of attorney
  • Selecting a trusted representative to make health care decisions on your behalf if you become unable to manage your own affairs due to illness or injury
  • Creating a will and trust
  • Minimizing estate taxes
  • Appointing your estate executor or representative
  • Providing peace of mind to you and your loved ones

Four basic elements of an estate plan can help you achieve these goals.

Creating Your Will

This legal document, called a testamentary will, transfers your estate, after you die, to the individuals or charities you name. Naming your executor  is another function of your will. This individual will ensure your wishes are carried out. Many older adults choose their most responsible adult child for this role.

Advise the person you choose to manage their expectations and advise your family of what to expect in your will. This way, you can address questions they may have and stave off family confrontations after you are gone.

Your will needs to include the following:

  • your named executor,
  • a list of individuals or charities you wish to receive your assets, and
  • a list of significant assets to leave to heirs

Be aware that if you have substantial assets in probate court in a succession, the process can be costly and time consuming.  (Succession (sometimes called a probate proceeding in states outside Louisiana) is the legal proceeding where the court oversees the distribution of your assets.) This can add stress to your executor’s role, as well as increase the time it takes for your family members to receive their inheritance.

You may wish to establish a trust; you can do so by working with an elder law attorney or estate planning attorney. Creating a trust can minimize taxes, restrict asset distribution, and also bypass probate / succession proceedings. These trusts are usually a revocable or irrevocable living trust, or special needs trusts. Your attorney can identify the trust type that best meets your needs.

Your Living Will and Durable Health Care Power of Attorney

A living will (or Advanced Medical Directive) outlines your choices regarding end-of-life treatments and will come into play while you are still alive but unable to communicate health care decisions. Similarly, a health care power of attorney gives authority to another person to make medical decisions for you. The person you name in your  medical power of attorney is typically a caregiver or family member who inspires the utmost trust.

Here are some general issues to consider when creating a living will:

  • Medications you are willing or unwilling to have administered to you
  • Permission for a feeding tube if you are unable to eat
  • Permission to be on life support and, if so, for how long
  • Willingness to accept palliative care at the end of life
  • Having a do-not-resuscitate order or DNR
  • Your decision about being an organ donor

If you have both documents, a living will usually trumps your health care power of attorney. Many older adults prefer to forgo a living will. They instead opt to rely on their health care proxy to make medical decisions on their behalf in the event that they become unable to communicate their wishes for treatment and life-saving measures. Whatever you choose, it is important to inform your loved ones of your health care preferences.

Durable Financial Power of Attorney

Much like a health care power of attorney, a financial power of attorney becomes active when you can no longer make financial decisions. The person you designate will manage your finances on your behalf. To alleviate excessive burden, consider appointing a different individual than your health care power of attorney. However, note that it is legally permissible to name the same person.

Your financial power of attorney should be highly trustworthy and financially stable. When selecting an individual in your life to fulfill this role, you may consider someone who not only lives near you, but is also willing and capable of serving. The individual must be financially responsible, trustworthy, and able to act in your best interests. Finally, this person should be proactive and assertive in protecting your finances.

While these documents represent the basics of an estate plan, your situation may require far more detail and nuanced expertise that an elder law attorney can provide if they do not also offer estate planning. Begin with a checklist including:

  • A list of your assets and debts
  • Assemble important supporting documents
  • Choose candidates for the executor (personal representative) and powers of attorney
  • Draft an outline of estate planning documents as listed above
  • Talk with your family about your goals and wishes

Connect With an Estate Planning Attorney

When you accomplish these tasks, an experienced estate planning attorney or elder law attorney can review your efforts and put your plan into legal action. You will save time and money by being organized and having a basic understanding the estate planning process before meeting with an attorney.

Once all of your estate planning documents are complete, you’ll have a sense of peace knowing you have a solid plan that best protects you and your loved ones. To get your estate plan going, contact Estate Planning and Elder Law Attorney Add Goff today at 318-255-1760 or info@GoffandGoffAttorneys.com. 

Retirees: Deduct Your Long-Term Care Insurance Premium

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Even if you have a long-term care insurance policy, you may likely be hoping that you won’t ever have reason to use it. Regardless of what the future holds, there’s one silver lining of which you may not be aware. That is, premiums on many long-term care insurance policies are in fact tax-deductible.

What Is Long-Term Care Insurance?

Long-term care insurance, or LTCI, can help you prepare for covering the cost of care in a nursing home facility or other setting when and if you need it. Unfortunately, the likelihood that you’ll need long-term care services at some point is high. In fact, about 70 percent of older adults find themselves having to rely on at least some long-term care in their later years.

When individuals require long-term care, it means that they need assistance when completing activities of daily living (ADLs). These basic daily tasks include dressing oneself, showering, or moving safely from one place to another in one’s household, such as from the bed to the bathroom, or in and out of one’s chair. In most cases, your LTCI policy will begin covering long-term care services if you cannot perform at least two ADLs on your own.

The cost of LTCI policy premiums can be out of reach for many people, and some insurers have been raising premiums over the course of time. According to one 2022 survey by HCG Secure, a mere one in 10 of Americans older than 65 have a long-term care insurance policy. However, if you have purchased a tax-qualified plan, you may be able to deduct the insurance premium as a medical expense.

Is My Long-Term Care Insurance Policy Tax-Deductible?

You can deduct numerous types of medical and dental expenses from your taxes. In addition to qualified long-term care insurance premiums, other deductible health expenses include the following:

  • prescription medications and insulin
  • substance use disorder inpatient treatment or smoking-cessation programs
  • prescription or reading eyeglasses
  • contact lenses
  • hearing aids
  • X-rays
  • artificial teeth
  • acupuncture treatments
  • the cost of caring for a guide dog for a person with a vision or hearing disability

When filing your 2023 federal income taxes, check with your insurance broker or state insurance commission to determine whether your LTCI policy qualifies.

Only certain long-term care insurance policies meet the criteria for a tax deduction. The National Association of Insurance Commissioners sets these rules. Typically, many hybrid long-term care policies do not qualify for a premium deduction. (For more information on what defines a qualified LTCI contract, consult the IRS’ Publication 502 for the current tax year.)

If your policy does qualify, you can deduct your LTCI policy premium up to a specified limit. Keep in mind that you will only be eligible for a tax deduction if all of your eligible medical expenses totaled more than 7.5 percent of your adjusted gross income for the year.

Select states also offer LTCI tax incentives, so be sure to check with your tax advisor. Note, too, that if you are self-employed, the rules regarding these deductions can differ.

How Much Can I Deduct in 2024?

If your annual LTCI policy premium is higher than the limit provided in the table below, it will count as a medical expense. The older you are, the higher your deductible limit. For example, if you are a 75-year-old individual at the end of 2023, you may be able to deduct up to $5,880 in LTCI premiums as qualified medical expenses.

Table 1. 2024 LTCI Tax Deductible Limits.

Attained Age Before the Close of 2023 Maximum Deduction in 2024
Age 40 or younger $470
Age 41 to 50 $880
Age 51 to 60 $1,760
Age 61 to 70 $4,710
Age 71 and older $5,880

These are lower deduction limits than in previous years. The Internal Revenue Service adjusts these limits each year.

The cost of long-term care services can in large part depend on where you live. Check out this online tool to get an estimate based on your ZIP code.

The ins and outs of LTCI products can prove to be complicated. Consult with Explder Law Attorney Add Goff to learn more about how LTCi can help your estate plan. An elder law attorney can provide guidance on purchasing an LTCI policy and also assist you in planning for the possibility that you will need long-term care in the future.  Goff and Goff cannot give tax advice. For tax questions, please consult with your tax professional.