Ronald Fatoullah & Associates - Elder Law

The Importance of Preparing for the Future


By Ronald A. Fatoullah

When people are in the midst of their child-rearing years, they typically don't worry about costs that they might incur in their post-retirement years. Life is in the now, and between carpooling, piano lessons and other extracurricular activities, summer camp, and the cost of tuition, time is limited and there are few extra funds to address the potential health care costs that may arise in the future.

Unfortunately, recent studies have shown that more attention should, in fact, be paid to the health care costs that might loom in our golden years. In 2015, Fidelity conducted a study and disclosed that a husband and wife both retiring at age 65 can now expect to spend an estimated $245,000 on health care costs throughout their ensuing retirement. This number, while daunting, does not even include the cost of long-term care, i.e., nursing home or home care.

If the cost of long-term care is added to the estimated $245,000, the number becomes truly overwhelming. New York State's Office of Health Insurance Programs provides annual surveys of the average monthly cost of a nursing home in various regions. For 2016, the average rate in New York City is $12,029. This rate is often far lower than many of the nursing homes in a given area. Nonetheless, if we use Medicaid's average, one year in a nursing home could cost $145,000. Based on these figures, it is vital for people to plan for these future costs.

In addressing these concerns, one option is for an individual to procure long-term care insurance. While the premiums are costly, the benefits, as well as the peace of mind derived from having such a policy, are invaluable. The younger one is when obtaining the insurance, the lower the annual premium. Furthermore, once there is any type of medical condition that appears on an applicant's medical record, the more difficult and expensive it is to get coverage. Meeting with a planner who specializes in long-term care insurance policies can be extremely helpful. A planner can project an individual's future income stream which can thereby reduce the actual coverage needed (thus reducing the premium). In addition, since the consumer will typically be purchasing a policy for an occurrence that will not transpire for many years, an inflation rider can be included which will automatically increase the benefits over time.

Purchasing long-term care insurance is not a solution for everyone. Some people can simply not afford the premiums. Another option is to engage in asset protection planning with an experienced elder law attorney. Currently, Medicaid is the only governmental insurance program that covers the cost of long-term care. Medicaid is a jointly funded, Federal-State health insurance program for low-income and needy individuals. For 2016, in order to be eligible for Medicaid, one cannot own more than $14,850 in non-exempt assets. A person who wishes to plan for his/her long-term care can legally protect his/her assets by transferring such assets to an irrevocable trust or to another person, such as a family member. There are a myriad of lawful options for a single individual or for a married couple, but it is important to engage in this planning when one is healthy and mentally vital. Consulting with an attorney who specializes in this area is critical.

Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. The law firm can be reached at 718-261-1700, 516-466-4422, or toll-free at 1-877-ELDER-LAW or 1-877-ESTATES. Mr. Fatoullah is also the co-founder of JR Wealth Advisors, LLC. The wealth management firm can be reached at 516-466-3300 or 800-353-3775.

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