Long-term care includes a variety of services needed by those who cannot do everyday activities because of health problems or disabilities. Long-term care helps with daily tasks like bathing, eating, dressing, and moving around. It is provided through nursing homes, assisted living/personal care communities, and home health aides.
The cost of long-term care can be huge. For instance, according to "Genworth’s Cost of Care Calculator," the average cost of staying in a semi-private nursing home can cost about $104,000 a year (even higher in Berks County, Pennsylvania, which is more like $174,000)! That is a lot of money and can use up your savings quickly. To handle these costs, people may consider buying long-term care insurance, look to their Medicare or supplemental insurance or by seeking Medicaid qualification. However, Medicaid is special because it is meant to help people who do not have a lot of money or assets, and Medicare does not pay for long-term care expenses.
Medicaid, a joint state and federal program, provides health coverage to low-income individuals of all ages. In some places, it might even pay for your stay in a nursing home for as long as you need it. To become eligible for Medicaid, you need to prove you do not have more than a certain amount of assets and income, which varies by state and the type of Medicaid coverage sought.
If you have more savings or assets than Medicaid allows, you might think qualifying for these benefits is impossible. However, a qualified elder law firm, such as Curran Estate & Elder Law in Reading, Pennsylvania, can provide strategies to become eligible for Medicaid while preserving assets for a spouse or children/other heirs.
You may have heard from a friend, neighbor, or the nursing home staff that two options for meeting Medicaid’s asset limits are to spend down or gift your assets. We hear all of the time that people have spent down their assets in order to apply for Medicaid. There are ways to protect and preserve assets and become financially eligible for Medicaid, which will be described below. We also hear about people who give away assets or add another person's name on titles to homes or bank accounts. Doing this without legal advice may create more problems in the long run.
If you use your own money to pay for long-term care – or gift or give away your nest egg – until you reach the required Medicaid asset limit, you may have nothing left over to care for your spouse or pass on to your loved ones. In addition, when you apply for coverage, Medicaid looks at gifts you made in the last five years. If you gave away money or property during this time (either by direct gifting or adding a name to your home or accounts), you will be made ineligible for a period for time before getting help from Medicaid, and you may not have the money to pay through the ineligibility period.
SmartAsset’s article, “3 Ways to Protect Assets from Medicaid,” recommends three strategies for qualifying for Medicaid coverage. Each method below is complicated, and thus, seeking the guidance of a qualified estate or elder law attorney is essential.
A Medicaid Asset Protection Trust is an irrevocable trust established during your lifetime that transfers ownership of assets to a trust, so Medicaid excludes them from the resource limit during eligibility qualification if five years or 60 months have passed since the transfer to the irrevocable trust. Again, though, this strategy must be carefully thought through and done properly with the help of an elder law attorney specializing in the Medicaid area.
This is a way to share your real estate ownership with someone else (like a child), so that when you pass away, they get it directly. This can help keep your home out of Medicaid's reach if done timely and properly.
An annuity is a financial product that gives you income over time. Some annuities are set up to match Medicaid rules, so buying one might help you qualify for Medicaid sooner. These types of annuities are very specialized, as they are not intended to be utilized to grow your funds; rather, they are intended to take over-resourced assets and turn them into an income stream.
Planning for anticipated long-term care expenses is critical, especially because of Medicaid's five-year look-back period. The earlier you start thinking about asset protection for Medicaid eligibility, the more choices you'll have for protecting your savings and getting the care you might need in the future. An accomplished elder lawyer can offer planning strategies to help protect assets for your spouse and loved ones. Even if you have done no future planning at all and a skilled nursing home is required, there is help for preserving assets and, potentially income, by doing what is commonly known as "crisis Medicaid planning."
Reference: SmartAsset (Feb 16, 2023) “3 Ways to Protect Assets from Medicaid”
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