For elder Australians, nursing home care is often the biggest expense they face. Yearly costs for nursing home living can easily amount to tens of thousands of dollars. Therefore, even if you've amassed a considerable amount of wealth over your working years, your stay in a nursing home can still drain you of your estate in a short amount of time. This is especially inconveniencing if you wish to transfer your property to your children and grandchildren.
Medicare can subsidise nursing home care, but it often prioritises those who have a limited income. Having a high income and assets can automatically disqualify you from Medicare, even if you need it to protect what is left of your estate. However, there are ways you can ensure that you receive Medicare coverage when you need it most.
Adjusting your monthly income to fit below the minimum
When you apply for Medicare coverage for a nursing home stay, your application will be reviewed for income eligibility. Your monthly income should amount to less than the established limits at the time of your application (check the Medicare website for updated income limits as they change frequently).
If your income is higher than the established maximum, you should consider adjusting your eligible income streams. An estates lawyer can help analyse your income sources and determine which ones should be reviewed for Medicare eligibility. If your income can be adjusted to fit under the cap, your application has a higher chance of being accepted.
Limiting your resources to maintain eligibility
Medicare officials also consider your assets and resources when determining eligibility. If you have a lot of assets directly under your name, you may be deemed wealthy enough to pay for nursing home costs. However, this exposes you to the reality of having your estate drained into providing elderly care.
A useful way of avoiding this challenge is to structure your resources such that they remain under the maximum amount allowed. This may include registering your assets under other people you trust so that you may be able to access them indirectly.
Establishing a living trust to protect and control your assets
Irrevocable living trusts are one of the most common ways people protect their assets from nursing home expenses. When you establish an irrevocable living trust, you essentially transfer control of your assets to a chosen trustee. The assets are determined as no longer under your control, and Medicare can't consider them when determining your eligibility.
The inner workings of living trusts can be complex. Make sure you work closely with a wills and estates lawyer when considering this option.