You may have heard friends, relatives, or co-workers discussing the need to include Medicaid planning in a comprehensive estate plan yet wondered why you would need Medicaid planning if you and your spouse are healthy. When you are still healthy is precisely when you need to create a Medicaid plan because doing so after you become ill will likely result in putting your hard earned assets at risk. A better understanding of the Medicaid program and long-term care costs will help you understand why planning ahead is so important.
As you age, the likelihood that you or your spouse will need long-term care increases exponentially. At age 65 there is a 50-50 chance of one (or both) of you needing long-term care before your death. At age 85 that increases to a 75 percent likelihood that you will need long-term care. In Illinois, the average cost of a year stay at a long-term care facility is almost $100,000. With an average length of stay of 2.5 years that puts the average tab for long-term care at a quarter of a million dollars. Don’t plan on Medicare covering any of the costs as the program does not pay for long-term care except in very limited circumstances and then only for 100 days. Most people end up turning to the Medicaid program for help covering the exorbitant costs of long-term care. While Medicaid does cover long-term care costs, you must qualify for coverage first.
Qualifying for Medicaid requires you, and your spouse, to have income and assets that are below the program limits. For a couple, that means you must have countable assets valued at less than $3,000. If your assets exceed that limit you will effectively need to use those assets first to pay for your care before Medicaid will help, meaning you could lose your life savings in the blink of an eye.
Transferring assets to an adult child or other loved one when you realize the need to qualify is not an option either because Medicaid uses a five year “look-back” period that examines your finances for the five year period prior to application for any assets transfers. If any are found, the value of the transfer is added back into your estate for Medicaid eligibility purposes.
As you can see, the need to qualify for Medicaid is likely and the need to plan ahead is certain. Waiting until the last minute could result in the loss of valuable, and hard earned, assets.
If you have additional questions or concerns about Medicaid planning, or your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.
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