Americans are living longer than they did even a few decades ago. While this is certainly good news, it comes at a financial cost. Living longer often means the need for long-term care which can be very costly. For many people, the only way to afford long-term care is to qualify for Medicaid assistance. If Medicaid helps cover the costs of long-term care for you, or a loved one, make sure that you understand how the Medicaid recovery system works or you risk losing valuable estate assets down the road.
Statistics tell us that the chance of needing long-term care for an individual who makes it to the age of 65 is one in three. That means there is a better than fifty percent chance that either you or your spouse/partner will need long-term care at some point in the future if you both make it to your golden years. With an average cost of around $75,000 per year, a stay in a long-term care facility can wipe out a lifetime of savings for a couple in a few short years. What makes the situation even more dire is that most basic health insurance plans will not cover long-term care. Unless you have a separate long-term care policy, the only option is to qualify for Medicaid assistance.
Medicaid is an assistance program that is funded by the federal government but administered by the individual states. This means that the eligibility standards and benefits may be slightly different from one state to the next. In all states, however, an applicant’s (and his or her spouse) income and resources are considered when determining eligibility. Only those who fall below the income and resources limits will qualify for assistance. Medicaid assistance can be the solution to long-term care costs; however, there can be a cost to the beneficiary’s loved ones down the road.
The Medicaid program may try to recover the money spent on a beneficiary. This occurs by filing a claim against the beneficiary’s estate after his or her death. Medicaid is considered a creditor of the estate just like any other company or person to whom the decedent owed a debt. If the decedent owns real property at the time of death, for example, Medicaid could be entitled to the equity in the property. Moreover, simply adding a son or daughter’s name to the property prior to death does not protect the property from Medicaid recovery.
The good news in all of this is that there are legal ways to protect your estate from Medicaid recovery attempts. The sooner you address the issue, however, the better your chances of protecting your assets. Be sure to discuss your options with your estate planning attorney if you are concerned about Medicaid recovery from your estate or from the estate of a loved one.
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