Because the average life expectancy rate has been steadily climbing with each passing generation you should be planning to live into your 80s or 90s. While this is good news overall, there is often a financial cost to living longer. In fact, the cost of long-term care can quickly wipe out your life savings. Qualifying for benefits under the Medicaid program may be an option; however, failing to plan ahead could disqualify you for the Medicaid program.
As a general rule, the longer you live the better the chance that you will need to be placed in a long-term care facility. The cost of long-term care can be high. Nationwide, the average cost of a year stay in a long-term care facility was $75,000 in 2012. Moreover, most health insurance policies do not cover long-term care nor does the Medicare program. While you can purchase a long-term care policy many people fail to do so either because they procrastinate or because they cannot afford one. What happens then if you suddenly find yourself, or your spouse, in need of long-term care?
Applying for benefits under the Medicaid program is an option; however, there are income and resource limits that could prevent you from being eligible. In Missouri, for example, the basic asset limit for a couple over age 65 is $2000. If you have spent a lifetime saving you likely have more than $2000 in assets. Those assets could prevent you from qualifying for Medicaid benefits. Simply transferring those assets to a child or other loved one is not a solution to the problem because the Medicaid program has a “look back” period. The look back period is a period of time that is included in your Medicaid application during which time you cannot have transferred assets. If you did transfer assets during that time period the value of those assets will be used to determine what your period of ineligibility will be for Medicaid benefits.
Ideally, you should include Medicaid planning in your overall estate plan long before you, or your spouse, are faced with the need for Medicaid assistance. Although this is the ideal situation it is never too late to engage in Medicaid planning. If you suddenly find yourself in need of Medicaid benefits and are concerned that your assets will disqualify you, or more importantly that you will lose your hard-earned assets, consult with an experienced estate planning attorney before doing anything else.