If you are approaching retirement age or have a parent or other family member or friend who is, recent federal and state legislation on nursing home programs has made careful planning for the future essential for every family. For years, it has been easily assumed that as a parent grew older, he or she could gift the family home and other assets to his or her children and depend upon public programs to pay for needed nursing home or other maintenance care while keeping family assets intact.

Quite simply, THIS IS NO LONGER TRUE. Both the states and the federal government have lost the ability to pay for exploding nursing care needs and have recently enacted legislation to put an end to gifting away family assets as a way to qualify for public nursing care assistance. Both federal and state law now have a strict five (5) year "look back" period for determining ineligibility because of gifts of family assets to family members or others. More importantly, the financial consequences of ineligibility have been greatly increased by denying ineligibility for public benefits for the entire value of any assets gifted within five (5) years. Simply put, if a parent gifted a house which now has a value of $250,000.00 to his or children four years and eleven months ago and now has to go into a nursing home or requires an assisted living facility, the period of ineligibility will be the monthly fee for nursing home divided by the value of the home or any other gifted asset: over five (5) years!

It is still possible to give everything away more than five years before you need public assistance and still qualify. However, giving everything away as one approaches retirement age hardly seems like a sensible strategy for comfortable retirement! You need as much money as possible when you retire, not poverty. A few of my clients who have prematurely given their homes to their children have had to reconsider and reverse this decision when they actually needed to go into an assisted living facility. Such facilities require a very high up front payment (often $200,000.00 or more) which can only be obtained by selling the family home. If the family home has been re-titled in the name of the parent's children, then the home will be taxed at a capital gains rate of 20% or more of the value of the home. If the home had remained in the name of the parent, the sale would be virtually tax free.

If you are under retirement age, and think that nursing home costs are somebody else?s problem, you could not be more wrong! Since the government is no longer going to pay for your mother's or grandmother's nursing home expenses, recent legislation makes it terribly clear that you are! Pennsylvania Act No. 43 of 2005 has restated and greatly expanded the duty of children of elderly parents to pay for their medical, nursing and home care needs and to permit public agencies and nursing homes to recover their fees and costs from any and all members of the elderly person's family. This is not an idle threat and recovery procedures and regulations have already been enacted which could make a child of a nursing home resident liable for up to $30,000.00 per year which obligation would be recovered by wage garnishment and other onerous means.

The bottom line is that to protect your family from ruinous nursing home costs, nursing home insurance and elder care insurance has never been more essential. The best age to purchase nursing home and other elder care insurance is between 55 and 60 years of age. If a person waits beyond 60 years, then the chances of developing medical conditions which makes such coverage too expensive or even unavailable, increase greatly. In order to pay for nursing care insurance (which runs about $1,200.00 to $1,600.00 per year), life insurance policies should usually be phased out as one grows older.

I have only begun in this letter to scratch the surface of financing elder care costs for our families and our society. Growing old like death and taxes cannot be avoided. Not looking ahead only guarantees the worst result. As a service to my clients, I will be glad to provide a free half hour consultation on elder care costs and to work with families to develop an elder care plan that will bring the comfort and security in retirement that we all deserve.