Like most people, you likely have at least a passing familiarity with the Medicaid program; however, you may go through your entire working years without ever considering the need to qualify for benefits through the program. What you likely do not realize is that there is a very good chance that you will need to qualify for Medicaid during your “Golden Years.” This need may arise as a result of your need for long-term care because Medicaid may be your only viable option for help with covering the high cost of that care. If you wait until you need to qualify for Medicaid, however, you may not meet the eligibility requirements without putting your hard-earned assets at risk. The way to prevent putting your assets at risk is to set yourself up for Medicaid eligibility now by including Medicaid planning in your comprehensive estate plan.
Will You Need Long-Term Care?
You probably realize that there is always a possibility that you will end up needing long-term care at some point in your life; however, you may not realize just how likely it is that you (and/or your spouse) will end up in long-term care. At age 65 you both stand about a 50-50 chance of eventually spending time in a long-term care facility. The longer you live the better the odds are that you will eventually need long-term care. The same applies to your spouse. If you are still here at age 85 you both have about a 75 percent chance of ending up in a long-term care facility. Furthermore, the average length of stay in long-term care is 2.5 years.
The Cost of Long-Term Care
Long-term care is expensive. Nationwide, the average cost of a year in a long-term care facility runs about $80,000, and that figure is expected to continue to rise in the years to come. Long-term care costs in the State of Illinois are about on par with the national average. Given that the average length of stay is 2.5 years, you could expect to spend about $200,000 for your long-term care expenses during your retirement years. For the average person, a $200,000 healthcare bill is certainly something to be concerned about as it could wipe out a “nest egg” rapidly.
Who Will Pay for Your Long-Term Care?
The cost of long-term care is not the only problem though. The other issue you need to worry about is the fact that neither your health insurance policy nor Medicare are likely to cover your long-term care costs. Most health insurance policies will not cover long-term care expenses unless you elected to pay for a long-term care rider, at a significant additional cost. Furthermore, the Medicare program will only cover long-term care costs under very limited circumstances, and even then only for a very short period of time.
The Medicaid Eligibility Challenge
Eligibility for Medicaid is based, in part, on an applicant’s income and countable resources. As a retiree your income may fall below the program limits; however, your countable resources could easily be valued at more than the program limits given the fact that the limit is as low as $2,000 for an individual applicant in most states. If your assets exceed the limit you will be required to rely on those assets first before Medicaid will start helping cover your expenses. Transferring assets in anticipation of applying for Medicaid won’t work either because Medicaid uses a five year “look-back” period that effectively discounts any asset transfers in the five-year period prior to your application for benefits.
How Can You Set Yourself Up for Medicaid Eligibility?
Medicaid planning uses legal tools and strategies to ensure that your hard-earned assets are protected and that you are eligible for Medicaid when the time comes that you need those benefits. Although your Medicaid plan will be unique, you may decide to include a Medicaid trust in your overall estate plan. A Medicaid trust is specific type of irrevocable living trust into which you transfer non-exempt assets well in advance of your need to qualify for Medicaid. That way, those assets are no longer part of your estate, reducing the value for your “countable resources” and allowing you to fit into the Medicaid eligibility requirements.
For additional information, please join us for one of our upcoming free seminars. If you have questions or concerns relating to Medicaid eligibility, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.
- Why You Should Review Your Estate Plan When Retiring - December 7, 2021
- Celebrity Estate Planning Disasters and What We Can Learn from Them - September 28, 2021
- Steps You Can Take to Prevent Elder Abuse - September 21, 2021