Are $350k in nursing home expenses threatening to be put in an IRA?
The $350,000 bill could be depleted in a few years if both spouses need semi-private rooms in skilled nursing facilities. However, this is not necessarily the case. For one thing, most people don’t meet nursing home bills of this magnitude. Also, you may receive government assistance to pay for nursing home expenses while keeping your IRA intact. Long-term care insurance and other financial tools offer other ways to pay for a nursing home without emptying your savings. If you’re concerned about paying for long-term care, consider talking to a Financial advisor.
Long-term care costs They are undoubtedly eye-catching. In the year In 2021, Genworth’s Financial Cost of Care Survey puts the average daily cost of a half-private room in a skilled nursing facility at more than $94,000 per year. At that rate, if both members of the couple want the same level of care, $350,000 in IRAs will only cover two years’ worth of expenses.
That doesn’t mean your retirement account will meet the same fate. According to the federal About aging management35% of people spend some time in a nursing home, and the average stay is about one year. People are more likely to use other forms of long-term care, such as assisted living and home aides at lower costs.
And the government entered. MedicareThe National Health Care Program, available to most people over 65, covers up to 100 days of nursing home care in most cases. If you need more time in long-term care, MedicaidFor people with limited financial means, a federal-state health care program covers an indefinite period of nursing home stay.
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You must have very limited financial resources to do this. Eligibility for Medicaid. States govern the program and the rules vary, but in some you can only have up to $2,000 worth of property outside of your home. The income limit varies but is strict.
Some states do not include IRAs. When determining Medicaid eligibility, so your IRA is safe if you live in one of these. However, most include IRAs as assets and in these you may have to withdraw almost all of the money in your retirement fund before Medicaid will pay for nursing home care.
If you have a lot of assets, you can satisfy the Medicaid means test by gifting assets to a family member. However, you must generally do so at least five years before applying for Medicaid. If you haven’t noticed A five-year look-back period; Medicaid may include transferred assets when determining eligibility. If that’s the case, you may need to withdraw the money in your IRA to pay for nursing home expenses unless your assets are sufficient to meet the Medicaid means test.