Advances in medical technology have significantly increased the average lifespan in the United States. This change has led to numerous questions that demand immediate answers. How long is an individual expected to work to afford their retirement? How much time does the average retiree spend living in long-term care? Does the average retirement account provide enough for an individual to get the care that they need?

As long-term care costs have increased, estate planning strategies have had to adapt and evolve. This is a great time to connect with a local estate planning attorney and make sure your retirement assets can help you meet your long-term goals.

Long-Term Care Costs Compared to Inflation

Long-term care has always been one of the most significant expenses in an aging person’s budget. As you age, your care expenses and medical costs increase rapidly. Unfortunately, across the board, long-term care has become increasingly expensive.

Over the years, the cost of long-term care has consistently outpaced inflation, and research from the Genworth paints a bleak picture of the financial burden retirees will have to shoulder for their long-term care expenses. They note that changes have steadily increased over the last 17 years, but in 2020 there was a significant jump that outpaced past changes.

In just one year, the cost of living in an assisted living facility increased by over 6% for an average annual cost of $51,600. Homemaker and home health aide services both jumped by more than 4% during the same time frame. Both private and semi-private nursing home rates swelled by more than 3%.

This obviously poses a huge problem, both for those who are close to retirement and younger adults who are trying to plan for their future needs.

Why Costs Are Rising So Quickly

One of the main reasons that expenses increased so rapidly in 2020 was COVID-19. The pandemic led to new changes in operations, which are of course associated with increased costs.

Other changes in the workforce have also contributed to increasing healthcare expenses. There is a significant labor shortage in this field, due in large part to the low wages and long hours expected of caregivers. Many facilities struggle to hire and retain skilled staff, which significantly increases a facility’s operating expenses. The importance of personal protective equipment has also played a role.

In many ways, it simply comes down to supply and demand. The supply of caregivers is much lower than the demand for caregivers, which means that home health aides, CNAs, and others who perform these services have their choice of employment settings. Until the industry can find a way to recruit new talent into the field and make this a more appealing occupation, this dynamic is likely to continue.

At the same time that supply is decreasing, demand is expected to jump at never-before-seen rates. From 2015 to 2050, the World Health Organization anticipates that the amount of people over 60 years of age will increase from 12% to 22% of the global population. This obviously means that a growing number of aging adults are going to need care in coming years.

Qualifying for Federal and State Benefits

It’s no surprise that long-term care costs have become a serious source of anxiety for aging individuals. This is particularly true considering that Medicaid, which can pay for medical expenses and long-term care is only available to low-income individuals.

To qualify for Medicaid and avoid spending everything you’ve earned over the course of your life on long-term care, it is in your best interests to meet with an estate planning attorney to discuss your options. By moving your assets to a Medicaid Trust, for example, you can ensure that they are not counted for the purposes of qualifying for Medicaid.

These trusts must be properly worded, however, and your assets need to be in the trust for five years before you can qualify for Medicaid benefits (five-year lookback period). For these reasons, it is best to take action on this and speak with an attorney sooner rather than later.

Contact an Experienced Virginia Estate Planning Attorney

You’ve likely sacrificed a lot to get to this point in life. With careful planning, you can ensure that your assets go on to create a better life for your beneficiaries rather than being eaten up to pay for your medical care. This requires the guidance of an estate planning attorney who understands how to plan for the possibility that you may need long-term care assistance.

For skilled legal guidance with estate plans in Virginia, contact Buck, Toscano & Terezkerz for a personalized consultation. Call our Charlottesville, VA office today at (434) 977-7977 or send us an online message to get started.

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