Depending on your current age, you may have heard about the need to include Medicaid planning in your estate plan but thought you are too young to worry about that yet. After all, Medicaid planning is something seniors need to think about when they need nursing home care, right? While that is partially correct, the fact is that for Kirkwood Medicaid planning to be 100 percent effective it needs to be included in an estate plan a long time before the need for long-term care (LTC) arises. With that in mind, your next thought is likely to be “when should Medicaid planning begin?”
It All Begins with the Possible Need for Long-Term Care
Without a crystal ball to tell us the future, there is no way to know which of those among us will eventually need LTC. What we do know, however, is that when they reach retirement age (65), everyone stands about a 50 percent chance of eventually needing LTC. We also know that the odds of needing LTC increase with each passing year. By age 85, you will have about a 75 percent chance of ending up in a LTC facility prior to your death. Keep in mind that if you are married, your spouse has the same odds of needing LTC as you do. Given the odds, it makes sense to plan for the possibility of needing LTC at some point because the cost of that care will likely be prohibitive. Nationwide, the average monthly cost of LTC runs about $6,500, or just over $80,000 per year as of 2016. In the State of Missouri, you are fortunate in that the cost of LTC has historically been less than the national average with an average monthly cost of $5,300 and an average yearly cost of $63,000 in 2016. Although LTC may typically cost less than the national average in Missouri, it remains outside the grasp of most people if forced to pay out of pocket. With an average length of stay of 2.5 years, you could easily be facing a LTC bill of well over $300,000 were you to need that care today. Imagine what that bill might cost by the time you reach your retirement years.
Paying for Long-Term Care
Like most seniors, you will probably rely on Medicare to cover the majority of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under very limited circumstances, and even then, only for a short period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Consequently, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs in a relatively short period of time. The good news is that Medicaid does cover LTC expenses; however, you must qualify for Medicaid benefits to be eligible for assistance with your LTC costs.
You will likely face some obstacles, however, if you failed to plan ahead. Medicaid is a “needs based” program, meaning that an applicant must demonstrate a need for the benefits to qualify. Consequently, Medicaid imposes both an income and an asset, or “countable resources,” limit on applicants. As a senior on a fixed income you may not have a problem with the income limit; however, the countable resources limit might pose a problem if you did not plan ahead because in most states, the resources limit is only $2,000-$3,000 for an individual applicant. Although some assets are exempt, it is easy to see how the value of your non-exempt assets could exceed the limit. In other words, your retirement nest egg could prevent you from qualifying for much needed Medicaid benefits if you failed to plan ahead. The good news is that by incorporating Medicaid planning into your estate plan now you can protect your hard-earned assets in the future.
When to Start Your Kirkwood Medicaid Planning
One of the primary reasons you need to incorporate Medicaid planning into your estate plan as early as possible is that Medicaid also uses a five-year “look-back” rule that effectively checks to see if you have made any assets transfers for less than fair market value during the five-year time frame prior to applying for benefits. The look-back rule effectively prevents last minute asset transfers. Planning well ahead of time, as you can now see, is the key to protecting your assets and qualifying for Medicaid benefits if you do need them in the future.
Contact Kirkwood Medicaid Planning Lawyers
If you have additional questions or concerns, please join us for an upcoming FREE seminar, or contact the experienced Kirkwood Medicaid planning lawyers at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.