One of the things you need to start thinking about as you get older is the possibility that you will need to pay for long-term care at some point down the road. Failing to plan for the possibility can potentially put your hard-earned assets at risk should the possibility become a reality. How can the need for long-term care (LTC) threaten your assets? The answer can be found in the eligibility requirements for Medicaid. Unless you can afford to pay for LTC out of pocket, you will likely need to qualify for Medicaid. Qualifying for Medicaid, in turn, can threaten your assets. The key to avoiding this possible outcome is to work closely with an experienced Medicaid lawyer because a Medicaid lawyer can help set you up ahead of time to qualify for benefits without the risk to your assets.
When Should I Start Planning for Long-Term Care?
When it comes to planning for the possibility that you will need LTC the question is not if you should plan for it, but when you should start planning. By the time you enter your retirement years around age 65 you already stand a 50-50 chance of needing LTC down the road. Those odds increase every year. By age 85 your odds of needing LTC before you die will increase to 75-25. Although it is entirely possible that you won’t ever need LTC, with those kind of odds it only makes sense to plan for the possibility.
Why Must I Plan for the Cost of LTC?
Aside from purchasing a home, LTC costs may be the largest bill you get during the course of your lifetime. As of 2016, the average cost of a year in LTC across the United States was $80,000. The average cost for the State of Illinois fell just below the national average at about $75,000 per year. Based on the average length of stay of 2.5 years, a common LTC bill will run you almost $200,000 in Illinois. What about health insurance? What about Medicare? Won’t these help cover my LTC expenses, you may be wondering. Unfortunately, the answer is usually “no.” Most health insurance policies exclude LTC costs unless you purchased a separate LTC policy or rider at an additional cost. Medicare only helps pay LTC costs if they are related to a hospital stay and, even then, only for a short period of time. For most seniors, that leaves paying out of pocket or qualifying for Medicaid as the only payment options. Qualifying for Medicaid, however, comes with its own set of obstacles and challenges because Medicaid imposes both an income and a “countable resources” limit that cannot be exceeded by an applicant. With a “countable resources” limit as low as $2,000, many seniors do not qualify for Medicaid right away if they failed to plan ahead. If you don’t qualify right away, Medicaid will impose a waiting period during which time you must “spend-down” your resources until you do qualify. In simple terms, this means you need to liquidate your assets and use them to pay your LTC expenses until the value of your assets drops below the program limit.
How Can a Medicaid Lawyer Help Me Plan?
To prevent the loss of assets caused by the Medicaid “spend-down” requirement, planning ahead is crucial. Why? Because Medicaid also uses a five-year “look-back” period that requires Medicaid to review your finances for the five-year period prior to your application. Any asset transfers for less than fair market value made during that time period will be discounted and the value of the asset imputed back into your estate. Therefore, you cannot simply transfer assets out of your estate when you realize the need to qualify for Medicaid. What you can do, however, is to work closely with a Medicaid lawyer well ahead of time to incorporate Medicaid planning tools and strategies into your estate plan. For example, you might decide to transfer assets into a Medicaid trust which will protect your assets from the spend-down requirement and set you up to qualify for benefits immediately if you do end up needing LTC down the road.
If you have questions or concerns regarding Medicaid eligibility for seniors in Illinois, contact the experienced Illinois Medicaid lawyers at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.