It’s difficult to imagine entering retirement and your golden years as a member of the middle class, but through a series of life changing events, needing to rely on Medicaid for financial support. However, this is what happens to thousands of Americans every year.  Roy Lieber recently recounted the story of Rita Sherman of Dedham, Massachusetts in his New York Times article, “One Woman’s Slide from Middle Class to Medicaid.” (To read the full article click here Rita Sherman had worked nearly her entire adult life as a bookkeeper until her husband needed full time care due to a long term illness. The pair lived in their starter home until Mr. Sherman’s passing. Rita Sherman eventually sold the home, purchased a long term care insurance policy and set up a trust to ensure that she would have the necessary funds to live out her years as she wished. Her new long term care policy covered up to three years of care in a nursing home. After receiving a devastating dementia diagnosis, Sherman and her family made the decision to move her into an assisted living facility and eventually to a nursing home with a specialized dementia care facility. Much to her family’s surprise, not only did the insurance company refuse to pay out the policy initially because Mrs. Sherman “was not sufficiently ill enough,” but her trust also failed, due to questionable provisions. When all was said and done, Mrs. Sherman spent her last five years in a nursing home, her long term care policy was eventually paid out, her funds were depleted and she qualified for Medicaid, which thankfully covered her remaining two years in the nursing home.

So how could this happen? Despite her best efforts and planning, Mrs. Sherman’s unexpected dementia diagnosis and slow decline was a costly unexpected turn. This is a common situation for thousands of aging Americans who receive a similar dementia diagnosis or another long term illness diagnosis. As the article highlights, it is imperative that people initiate financial and estate plans with flexibility that can handle life’s many curve balls. In addition, plans should be reviewed and revised often.

If you have questions on this topic and how it may relate to you or need help planning for your golden years please feel free to contact any of the attorneys in our Elder Law department at 617-951-3100.