Like the majority of people, you may make it through your entire working years without the need to rely on Medicaid benefits to cover your healthcare expenses. As a result, you may know very little about the Medicaid program. Your lack of knowledge may not concern you given the fact that you have never needed to turn to Medicaid in the past. Unfortunately, what you don’t know about Illinois Medicaid could hurt you in the future though. To prevent that possibility from occurring, you should take the time now to learn about Illinois Medicaid programs, eligibility guidelines, and the reasons why you might need to qualify for benefits in the future.
What Is Medicaid?
Medicaid is a federally established healthcare program that is primarily funded by the U.S. federal government; however, each individual state has the option to provide supplemental funding for the state’s Medicaid program as well. In addition, although Medicaid is a federal program, it is administered by the individual states. As a result, the eligibility guidelines and benefits provided will vary somewhat from state to state.
Why Would You Need to Qualify for Medicaid in the Future?
The high cost of long-term care (LTC) is the reason you may eventually turn to Medicaid for help. When you enter your retirement years (age 65), you stand about a 50 percent chance of one day needing LTC. Those odds increase each year. At age 85, your odds of needing LTC increase to a 75 percent chance. Keep in mind that if you are married, or have partner, he/she stands the same chance as you of one day needing LTC. The cost of that care will be high. For 2016, the average cost of a year in LTC in the State of Illinois was about $67,000. Experts predict that those costs will increase significantly in the years to come. In Illinois, 20 years down the road you can expect to pay about $121,000 a year for LTC. Most private health insurance plans will not cover LTC expenses nor will Medicare, leaving Medicaid as the only viable option for over half of all seniors.
What Are the Obstacles to Illinois Medicaid Eligibility?
Knowing that Medicaid does cover LTC costs is certainly good news; however, Medicaid can only help you if you qualify for benefits. For seniors who failed to plan ahead, the Medicaid income and/or asset limits can be problematic. The income limits are tied to the Federal Poverty Level (FPL) which fluctuates depending on exactly where you live and which changes on a yearly basis. The asset limit, however, is usually as low as $2,000 for an individual and $3,000 for a married couple. Not all assets are included when calculating the value of your “countable resources” for determining eligibility; however, even excluding major assets it is not uncommon for a senior to have assets that exceed the limit.
What Is the Five-Year “Look-Back” Period?
Transferring assets to children or other loved ones when you realize you need to qualify for Medicaid won’t work because of the Medicaid five-year “look-back” rule. The rule is fairly simple. It allows Medicaid to review your finances for the five-year period prior to your application for benefits. If they find any assets transfers for less than fair market value the transfer will be discounted and the value of the asset imputed back into your estate for purposes of calculating the value of your estate to determine eligibility.
What Is Medicaid “Spend-Down?”
If your assets exceed the program limit, Medicaid will impose a waiting period during which time you will be expected to “spend-down” your assets. In essence, this mean you will have to cash in your hard-earned assets and use them to cover your LTC expenses during the waiting period. The length of the spend-down period is calculated using the amount your assets exceed the program limit and the average cost of LTC in your state. For example, assume you have countable resources valued at $50,000. The amount in excess of the limit is then $48,000, assume you are applying as an individual. The average monthly cost of LTC in Illinois is $5,600. Therefore, you divide $48,000 by $5,600 which gives you an answer of 8.57. Rounding up, it means you Medicaid would impose a nine months waiting period before you would be eligible for benefits.
What Is Medicaid Planning?
If you have assets that will exceed the program limit, the good news is that by incorporating Medicaid planning strategies into your comprehensive estate plan early on you can protect those assets and ensure that you will be eligible for benefits if you need them down the road.
If you have questions or concerns regarding Illinois Medicaid, contact the experienced Illinois Medicaid planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.