Creating a successful and comprehensive estate plan requires you to do much more than just decide how you wish to distribute your estate assets after you are gone. It also requires you to think ahead and guard the assets you acquire over the course of your lifetime so that there is something left to distribute at the end of your life. Considering the likelihood that you will need long-term care (LTC), and the high cost of that care, is essential to ensuring that you have assets left to pass down to loved ones after you are gone. To do that, you should anticipate the potential need to qualify for Medicaid to help cover your LTC costs. Toward that end, the Grand Forks trust attorney at German Law provides the top five Medicaid planning tips.
Top 5 Tips
The likelihood of needing LTC during your “Golden Years” and Medicaid planning go hand in hand for the average person. To ensure that you plan accordingly, the following Medicaid planning tips should help:
- Familiarize yourself with the Medicaid guidelines. Because it is intended to help low-income recipients, Medicaid uses both an income and an asset threshold that you cannot exceed if you wish to qualify. The asset limit is typically exceptionally low — $2,000 for an individual in most states. While some primary assets, such as your home or a single vehicle, are exempt, most seniors who have been saving for decades have assets that exceed the limit.
- Consider the cost of LTC. The important issue with the need for LTC from an estate planning perspective is the cost of that care. Nationwide, the average cost of LTC in 2020 was about $100,000 per year. In the State of North Dakota, the average cost is higher than the national average at over $150,000 per year. With an average length of stay of three years, that puts an average LTC bill at $450,000 per year right now. If you are in your 40s right now, however, it could be another 30 years before you need LTC. At an estimated cost of over $370,000 per year in 30 years, you would be looking at a LTC bill of close to $1 million when you need LTC. Since neither Medicare nor most private health insurance plans cover LTC expenses, you would need to pay those expenses out of pocket unless you qualify for Medicaid which does cover LTC costs.
- Plan now. Waiting until the last minute to worry about qualifying for Medicaid puts your assets at risk because of the five-year “look-back” rule. The five-year look-back rule allows Medicaid to check for asset transfers made within the last five years for less than fair market value. If any are found, Medicaid may impose a waiting period during which time you will not be eligible for Medicaid benefits.
- Do not be worried about your spouse. There was a time when qualifying for Medicaid could leave a spouse without income or resources; however, the Medicaid Spousal Impoverishment rules now prevent that from happening.
- Never assume it is too late. While it is always best to include Medicaid planning in your estate plan as early on in your life as possible to ensure your eligibility for Medicaid in the future, should you need it, you may still be able to take advantage of some Medicaid planning tools and strategies if you suddenly need to qualify for Medicaid and did not plan ahead. You might, for example, be able to use a common last minute Medicaid planning strategy that involves converting a non-exempt asset to an exempt asset.
Contact a Grand Forks Medicaid Planning Attorneys
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about Medicaid planning, contact the Grand Forks Medicaid planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.