Elder law attorneys assist clients that are concerned about legal and financial matters that senior citizens often face. There are a number of different issues that we deal with, but the matter of long-term care is definitely at the top of the list.
You may assume that the Medicare program will pay for a stay in a nursing home if you ever need this level of assistance with your day-to-day needs. This makes sense, but in reality, Medicare will not pay for the custodial care that nursing homes provide.
This is something that everyone should take seriously, because a very significant percentage of individuals will someday need help with their activities of daily living. Just over one third of elders will reside in nursing homes eventually.
When you digest this statistic, you can see that the need for long-term care is not a remote possibility; in fact, it is a likelihood.
Medicaid to the Rescue
The solution for many people that require long-term care is Medicaid, because this government program will pay for residence in a nursing home. However, since the program is intended for people with sparse financial resources, there are asset and income limits. In order to gain eligibility, you must have no more than $2000 in assets that are considered to be “countable”.
Clearly, this is a very small number, but many things that you may own are not considered to be “countable” assets for Medicaid purposes.
In many instances, a senior will require long-term care while his or her spouse can still live independently. Under those circumstances, the healthy spouse can remain in the home, and there would be no equity limit at all.
One vehicle that is used as a primary source of transportation is not countable, and household goods and personal effects are exempt. If you have a wedding ring and/or an engagement ring, these would not be counted, and heirloom jewelry would not be included either.
An applicant can have unlimited term life insurance, which is coverage that does not have a cash value. Up to $1500 of whole life insurance is allowed, and burial plots are not countable assets.
As elder law attorneys, we help people position their assets with future Medicaid eligibility in mind. It is important to act in advance, because there is a five-year look-back period. If this rule is violated, a penalty is imposed.
For example, if you gave away enough to pay for two years of nursing home care within five years of the submission of your application for Medicaid coverage, your eligibility would be delayed by two years.
Advance Planning Is Key
This look-back rule makes it very difficult to respond to the need for nursing home care in an emergency situation. It is wise to consider positioning your assets with future Medicaid eligibility in mind when you are still perfectly capable of handling all of your own day-to-day needs. This can be part of a comprehensive, long-term strategy for aging.
Depending on your financial situation, you can potentially enjoy your active retirement years to the fullest as you simultaneously protect your legacy as you aim toward Medicaid eligibility.
One approach would be to convey assets into an irrevocable Medicaid trust. If you go this route, the assets would not be counted if you were to apply for coverage. Of course, the conveyance into the trust would have to take place at least five years before you ultimately apply for Medicaid.
After you transfer the assets into the trust, you would not have access to the principal. However, you would be able to continue to receive income that is generated, and this could be sufficient to provide you with a suitable quality of life under the right circumstances.
Schedule a Consultation Today!
If you would like to discuss the best ways to prepare for nursing home care expenses, we would be glad to help. You can schedule a consultation if you give us a call at 219-865-2285, and you can alternately send us a message electronically.