Healthcare costs are rising even as people are living longer. Many individuals worry that they will need long-term care and cannot pay for it. Nursing home costs average $100,000 annually, and home healthcare expenses can decimate a budget. Families worry they cannot bear this financial burden and their loved ones won’t receive the care they need.
Medicaid planning is essential to ensure every person is prepared for the future. This planning helps protect assets while ensuring high-quality care is obtained. Quality Medicaid Care works with families to achieve these goals. It provides professional guidance for families to ensure they are prepared for anything that arises in the future regarding long-term care.
Medicaid and Long-Term Care
Medicaid is a safety net for low-income individuals. According to the Centers for Medicare and Medicaid Services, it pays for nursing home care for approximately 66 percent of residents in these facilities. To receive this help, a person must meet eligibility requirements. Most states require recipients to have less than $2,000 in assets if they are single and less than $3,000 if they are married. Certain assets aren’t counted when making this determination, including one vehicle, a primary home up to a certain equity limit, and personal belongings.
Protecting Assets
Men and women who want to protect their assets but worry they may need Medicaid to help pay for long-term care need to plan. They must reposition assets to ensure these assets remain protected without making them ineligible for Medicaid. Countable assets may be converted to non-countable ones to avoid Medicaid penalties.
A healthy spouse may use the Community Spouse Resource Allowance to maintain assets while ensuring their partner remains eligible for Medicaid. State regulations determine how much the spouse can have. Another option is for the healthy spouse to keep all income in their name. Doing so would not impact the ill spouse’s eligibility.
Some people choose to set up an irrevocable trust. Assets can be transferred to this trust and become non-countable. Nevertheless, the person must adhere to the five-year look-back period when transferring assets to the trust to ensure it does not affect their Medicaid eligibility.
The Look-Back Period
When determining a person’s eligibility for Medicaid, officials consider the five years before the individual applies for the program. If they make transfers during these five years and an asset is valued at less than fair market value, their eligibility for the program may be delayed. The penalty period is determined by the amount transferred and the average monthly cost of nursing home care in their state. Authorities take the transfer amount and divide it by the care cost.
However, people may transfer funds to their spouses, children under 21, and adult children with disabilities without being penalized. They may also transfer the primary residence to adult children who have cared for them for at least two years. These exceptions allow people to transfer assets to close family members without penalty.
People must adhere to all laws and regulations when handling assets and applying for Medicaid. Many people seek professional advice before making transfers to ensure they comply with current regulations. Timing the transfer of assets is critical, and people need to plan for these moves long before they become necessary. Doing so allows them to reposition assets without worry about look-back period penalties. If a person is within the look-back period, professional advisors can also help minimize the penalties. It never hurts to ask.
