Unless you have been a Medicaid recipient in the past, chances are good that you have a number of misconceptions where the program is concerned. For example, you may believe that Medicaid is only for the poor or only covers children. While it is true that the Medicaid program is intended to provide healthcare coverage for those with low incomes, Medicaid also provides coverage to a significant percentage of the elderly in the United States. Whether you realize it or not at this point in your life, the odds are very good that you, or your spouse, will need the benefits offered by the Medicaid program at some point during your retirement years.
The reason why so many of the nation’s elderly rely on Medicaid is that Medicaid pays for long-term care – something that most private health insurance policies do not do. Furthermore, Medicare only covers long-term care costs under very limited circumstances and then only for a very short period of time. At an average annual cost of over $75,000 and an average length of stay of over two years, the average patient cannot afford to pay for long-term care without healthcare coverage. Finally, statistics tell us that at age 65 you stand about a 50 percent chance of needing long-term care before you die. By age 85, your chances jump to 75 percent. The bottom line is that you or your spouse are likely to need long-term care and you are likely to need Medicaid coverage to pay for it.
You may have heard that it is important to include Medicaid planning in your estate plan. The reason for this is that Medicaid has income and asset limits that cannot be exceeded by program participants. In this sense, Medicaid is a program for the poor; however, that doesn’t mean you cannot qualify with careful planning. Early planning, however, is the key because Medicaid employs a five year “look-back” period. The “look-back” period allows Medicaid to look through your finances for the five year period prior to your application for benefits. Any asset transfers that took place during that time period are subject to being ignored by Medicaid, meaning the value of the asset you transferred will be included back in your countable resources for purposes of determining eligibility. If your assets exceed the program limit you will need to “spend-down” those assets before Medicaid will start covering the costs of your care.
Careful Medicaid planning starting early on will ensure that your assets are protected and you are eligible for benefits when the time comes that you need them. Talk to your Illinois estate planning attorney about including Medicaid planning in your overall estate plan.
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