Strategies for Affording Assisted Living

When we met Violet, she was concerned that she would run out of funds someday and be unable to continue to afford living at the beautiful assisted living facility she had grown quite fond of.  Violet’s concern is shared by many assisted living residents.  We were delighted to tell Violet that there were three things she could do, and they can apply to you as well.

Veterans Aid & Attendance Pension

The first is to qualify for Veterans Aid and Attendance, pension benefits, if you or your late spouse served during wartime.  It can pay veterans up to $1,788/month, and surviving spouses up to $1,149/month, for life.  There is an asset limit, but excess assets can be reduced through transfers to children or to an irrevocable trust.  (There is no look-back regarding transfers.)  Assets also can be converted to irrevocable annuities, but they should be Medicaid-compliant also.  There is an income test as well, and the lower your income, the greater the pension.  Fortunately, excess income can be reduced by deducting costs of care, including assisted living if properly documented, and care provided by family members.  Changes have been proposed to some of the rules which may change some of the strategies used.  As accredited VA attorneys, we can help you develop strategies that will maximize your pension, now and under the new rules if and when they become effective.

Medicaid and Assisted Living

The second is to qualify for the CT Assisted Living Pilot Program, which pays the care portion of your assisted living bill.  You qualify for it by qualifying for Medicaid.  There is a strict asset limit for this program as well.  Excess assets likewise can be reduced by transfers.  There is a five-year look-back but, for many clients, penalties can be much shorter than five years.  If you transfer assets, you might choose to transfer them to an irrevocable grantor trust to prevent capital gains taxes to your children.  You also can irrevocably annuitize assets if the annuities meet strict guidelines.  There is an income limit as well, but excess income can be reduced through a Pooled Trust which you deposit your excess income into and which then pays your bills from that income.

Tax Deduction of Assisted Living

The third is by having a child pay for most of your care from funds you transfer to him, claim you as a dependent on his income tax return, deduct your costs of care from his taxable income (to the extent it exceeds 10% of his adjusted gross income), and use the savings to pay for assisted living longer.  If you need assisted living because of deficits with two activities of daily living or due to cognitive impairment, your assisted living charges are fully deductible.  Your deduction could be $70,000-$100,000/year, and may be far more valuable to your child than to you. You can arrange for your child to take that deduction and use the savings to pay for more months or years of assisted living for you!

Danbury, Connecticut Elder Law Attorneys

We develop customized plans every day for our clients using different combinations of the strategies outlined above and others.  There are many factors to consider, including your age, your overall level of assets and income, the liquidity of your portfolio, deferred taxes (IRAs, etc.), the stability of your children, your risk tolerance, etc.  What your friend or neighbor did may have been best for her but not for you.  Consult with a professional who will advise you of the best options for you!

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