At some point during your “Golden Years” there is a better than average chance that you and/or your spouse will need long-term care. As a result, there is also a better than average chance that you will need to qualify for Medicaid to help cover the costs of that care. Qualifying for Medicaid can be a complicated process, involving a number of potential obstacles. One of those potential obstacles is Medicaid’s five year “look-back” period. By taking the time to understand the Medicaid eligibility requirements now, and incorporating Medicaid planning into your overall estate plan now, you won’t have to worry about those potential obstacles when the time comes to actually apply.
The odds that you or your spouse will need long-term care increase dramatically as you age. If you do need nursing home or other long-term care you can expect to pay over $80,000 per year, on average, with an average length of stay of 2.5 years. Neither Medicare nor most private health insurance plans cover long-term care. Not surprisingly, about half of all seniors in long-term care turn to Medicaid to help pay for the care. Medicaid, however, has both income and asset limits that cannot be exceeded by an applicant. The asset limit typically means that an individual cannot have more than $2,000 in countable resources and a couple not more than $3,000. This can prevent a problem for applicants who failed to plan ahead.
Transferring assets when you realize you need to qualify for Medicaid is not an option because of the five year “look-back” period Medicaid uses when reviewing an application. In essence, the “look-back’ period allows Medicaid to review, or “ look-back ”, at your finances for five years prior to the date of your application. Any asset transfers during that time period are usually disallowed, meaning Medicaid will effectively ignore them and disqualify you for benefits accordingly. The amount of time you are disqualified for will depend on a number of factors, starting with the value of the transfer. Usually, your disqualification period is calculated using the average cost of care and the total value of the transfer(s). For example, if the average cost of long-term care in your state is $6,000 per month and you transferred assets valued at $48,000 you would likely be disqualified for eight months ($48,000/$6,000 = 8).
If you have additional questions or concerns about Medicaid planning, or estate planning in general, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.