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When you contemplate your estate plan, and the goals and objectives involved in that plan, you probably focus on things such as protecting your loved ones and distributing your assets according to your wishes upon your death. Qualifying for Medicaid may not be something that initially comes to mind; however, including a Medicaid planning component in your comprehensive estate plan is a good idea if you wish to protect your hard-earned assets. To help you understand the importance of Medicaid planning, a Kirkwood Medicaid lawyer explains why planning ahead for the need to qualify for Medicaid is crucial.

Your Odds of Needing Long-Term Care

Like most people, you are undoubtedly planning to grow old in your own home and spend your last days in your own bed. Hopefully, those plans will work for you; however, it can be a costly mistake to ignore the strong possibility that you will eventually end up in a long-term care facility before the end of your life. Even if you manage to avoid the need for long-term care (LTC), your spouse may end up needing it, if you are married. Statistically speaking, both you and your spouse stand about a 50 percent chance of eventually needing LTC at the time you enter your retirement years. Every year that passes, the odds of needing LTC increase.

Paying for Long-Term Care

As a senior, you may look forward to relying on Medicare to cover the majority of your healthcare costs. Unfortunately, however, Medicare does not cover LTC expenses unless they follow a hospital stay and even then only for a short period of time. Most basic health insurance plans also exclude LTC expenses. Those expenses aren’t inconsequential either! Nationwide, the average yearly cost of LTC was $80,000 for 2016. In 20 years, that figure is expected to be around $150,000. The average length of stay in a LTC facility is 2.5 years, putting the average current cost of a LTC stay at about $200,000 and the expected average cost of a LTC stay in 20 years at almost $400,000. Unless you can afford to cover those expenses out of pocket, planning ahead is crucial.

Qualifying for Medicaid

Fortunately, Medicaid will cover LTC expenses; however, you must first be found eligible for benefits. For many seniors, that is where the need to plan ahead comes in because of the Medicaid income and asset limits. Medicaid is primarily funded by the federal government and is intended to help cover healthcare costs for low-income individuals and families. Consequently, the program uses income and asset limits when determining eligibility. In most states, the asset limit is as low as $2,000 for an individual. Although some assets are excluded when determining eligibility, the average senior has amassed enough assets over the course of a lifetime to have non-exempt assets worth more than the program limit.

What Happens If You Fail to Plan Ahead

If you failed to plan ahead at the time you apply for Medicaid, and the value of your assets exceeds the program limit, your application will be denied. You will then have to “spend-down” your assets before Medicaid will approve your application. The end result for many seniors who failed to plan ahead is the loss of a significant chunk of their retirement nest egg. Simply transferring the assets to an adult child when you realize the need to qualify for Medicaid isn’t an option because Medicaid also uses a five-year “look-back” period that reviews your finances for the five year period prior to your application looking for asset transfer made for less than fair market value. If you made any, they could trigger a waiting period during which Medicaid won’t help cover your LTC costs. The bottom line is that failing to plan ahead by including Medicaid planning in your overall estate plan could cost you the loss of some, or all, of your retirement nest egg.

Contact a Kirkwood Medicaid Lawyer

If you have additional questions or concerns, please join us for an upcoming FREE seminar. For more information regarding Medicaid planning, contact an experienced Kirkwood Medicaid lawyer at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.