The Medicaid program could be important to you when you become a senior citizen, even if you are going to qualify for Medicare when you reach the age of 65. Medicare will pay for covered medical expenses as we all know, and it will also help with convalescent care after an injury or illness.
However, there is another type of care that many seniors require called custodial care. This is the type of care that you would receive if you were to reside in a nursing home or assisted living community. There are also people who can receive custodial care in their own homes.
Custodial care is extremely expensive, regardless of how you receive it. Nationally, a year in a private room in a nursing home will cost you over $90,000 on average, and these costs are rising all the time. Since many people require multiple years of care, the final bills can be exorbitant.
Long-term care communities and paid in-home caregivers are also expensive. We practice law in the state of North Dakota. According to a Genworth Financial survey, the median annual cost for a one-bedroom unit in an assisted living community in our state is $38,865. The annual cost for adult day health care is nearly $20,000.
Medicaid, the Spend Down, and the Look-Back
Though all of the above information can leave you with a grim impression, there is a long-term care solution that is widely embraced by American senior citizens. Medicaid, which is a government program for people with financial need, does pay for custodial care. This program pays for most of the long-term care that seniors are receiving, and most of them were never financially needy.
To qualify for Medicaid, you can engage in a Medicaid spend down. As the name would suggest, this is a divestiture of assets. You could literally spend the money yourself, but many people will give gifts to their loved ones.
If you decide to go this route, you have to be aware of the Medicaid look-back. A penalty is imposed if you give away assets within five years of applying for coverage. To provide an example, if you give away enough to pay for two years of long-term care, your eligibility would be delayed by two years. You would be forced to pay out-of-pocket for this interim.
There is an exception to this rule. If you have a child who has been living with you in your home providing you with custodial care for at least two years before you submit your application for Medicaid, you could give the child the home before you enter a long-term care facility. This gift would not violate the five-year look-back.
Nursing Home Asset Protection Planning
This one exception can be useful for some people, but you can protect your assets in the optimal manner if you plan ahead in advance with the five-year look-back in mind. If you would like to discuss things with a licensed professional, send us a message through this page to set up a free consultation: Grand Forks ND Elder Law Attorneys.