One of the greatest fears of elderly Americans is that they will end up in a nursing home. Not only can this mean a loss of personal autonomy, but it can also exhaust one’s hard-earned assets. Medicaid is a confusing and stressful topic. As much as you would like to avoid it, it is wise to understand the basics now and learn how to properly plan for the possibility of long-term care.
How to Plan for Long-Term Care
One way to pay for nursing home care is with long-term care insurance. Long-term care insurance generally pays for some or all of the costs of nursing home care, assisted-living care and/or home healthcare. While having long-term care insurance is ideal, the fact is that many people cannot afford it.
If you cannot afford long-term care insurance, another option is to protect assets with an Irrevocable Trust. The purpose of this trust is to protect the assets you place in the trust in the event that you need long-term care in the future. After five years, the transfer of assets that you make to the trust will no longer be countable for Medicaid eligibility purposes.
Who can Qualify for Medicaid?
To qualify for Medicaid, you must be blind, disabled or age 65 or older. If you fall into one of these categories, you must also meet certain financial eligibility requirements. For a single person to be eligible for Medicaid, his or her countable assets must be under $2,000. A married couple can keep approximately half of their assets, up to the current maximum of $119,220, and still qualify for Medicaid. Some assets (including a home and vehicle) are not countable assets when applying for Medicaid. Extensive planning opportunities are available that allow the Medicaid applicant to protect a substantial amount of their assets. When it becomes clear that someone needs nursing home care, seeking the advice of an attorney as soon as possible is key.
Penalty Period for Gifting
Gifts in excess of $1,200 per year, whether to children or to charity, made within the five years prior to applying for Medicaid benefits will create a penalty period. During the penalty period, Medicaid will not pay for the cost of nursing home care.
We are living longer; therefore, the need for long-term care is increasing. Careful planning, whether in advance or in response to an unanticipated need for long-term care, can help protect your assets for those you love.
About the Author
Leah C. Good, Attorney
Troyer & Good, PC