Like many people, you may never have given your eligibility for Medicaid benefits a second thought because you have never needed to qualify for Medicaid. There is a very good chance, however, that you will need the benefits Medicaid offers at some point during your retirement years. If that time comes, and you failed to plan ahead, you may find that qualifying for Medicaid puts your hard-earned assets at risk. The way to prevent that from occurring is to understand the Illinois Medicaid eligibility requirements now so that you can plan for later.
Why Would You Need Medicaid during Retirement?
If you have never needed Medicaid before, why will you need it during retirement? The answer can be found in the likelihood that you will need long-term care during your retirement years and the cost of that care if you do. When you retire, you will stand about a 50 percent chance of needing long-term care (LTC) at some point in the future because of physical and/or mental deterioration caused by the natural aging process or by an age-related dementia condition. The longer you live, the greater your odds are of needing LTC. By age 85, you stand a 75 percent chance of needing LTC before you die.
If you do end up needing LTC, how will you pay for the high cost of that care? Nationwide, the average cost of a month in LTC is over $6,500. As an Illinois resident, you may be able to enjoy LTC costs that are slightly lower than the national average; however, you are still looking at an average of about $6,000 per month and an average length of stay of 2.5 years. As a retiree, you may depend on Medicare to cover most of your healthcare expenses. Unfortunately, Medicare will not cover your LTC expenses nor will your private healthcare coverage (if applicable) unless you paid for a separate LTC policy. For over half of all seniors in LTC that leaves Medicaid as the only option for assistance with the high cost of care.
Illinois Medicaid Eligibility
Although Medicaid does cover LTC costs, qualifying for benefits as a senior can be problematic if you failed to plan ahead by including Medicaid planning in your estate plan. Medicaid is a federally funded healthcare program; however, it is administered by the states and some states supplement the funds provided by the federal government. Consequently, the eligibility guidelines can differ somewhat by state. Furthermore, Medicaid offers benefits to several different categories of recipients, each having its own eligibility guidelines. All Illinois Medicaid recipients, however, must be residents of Illinois and a U.S. citizen, permanent resident, or fit into one of the other categories of foreign nationals who have legal status here in the U.S. For seniors, there are also income and asset guidelines. This is typically where applicants who did not plan ahead encounter a problem.
An applicant age 65 and older must have income below 100 percent of the Federal Poverty Level (FPL). The FPL is determined by where you live and your household size. The FPL also changes each year. Seniors are also subject to asset limits of $2,000 for an individual and $2,000 for a couple. Some assets are exempt from the asset limit calculation, such as your primary residence and a vehicle. Despite the fact that some assets are exempt, many seniors run into a problem with the low asset limit. If your assets exceed the limit Medicaid will impose a waiting period. The length of the waiting period is determined by dividing your excess assets by the average monthly cost of LTC where you live. For example, assume you have assets valued at $50,000, or $48,000 in “excess” assets. With an average monthly cost of care in your area of $6,000 you would be forced to wait eight months ($48,000/$6,000=8) during which time you would be expected to “spend down” your assets. Basically, this means you need to liquidate your excess assets and use the proceeds to cover your LTC expenses during the waiting period. At the end of the waiting period, you will be eligible for Medicaid benefits.
If you do not want to risk putting your nest egg in jeopardy, speak to your Illinois estate planning attorney about incorporating Medicaid planning into your comprehensive estate plan now.
If you have questions or concerns regarding Illinois Medicaid eligibility, contact the Medicaid planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.