At some point during your “golden years” there is a very good chance that you, or a spouse, will need to qualify for Medicaid in order to cover the high cost of long-term care. The thought of depending on Medicaid may be frightening if you have heard stories about the program that don’t paint a favorable picture. Specifically, you may want to know “ Will the state take my assets when I go on Medicaid? ” The question is a common one; however, the answer is not a simple one.
First, it helps to know when and why you are likely to need Medicaid benefits. As you age, the odds of needing long-term care increase dramatically. At age 65 you stand a one in two chance of needing long-term care at some point in your future. By age 85, those odds increase to three in four. Long-term care is not cheap. In fact, the average cost of a stay in long-term care is about $6,500 per month and the average stay is 2.5 years. Most people cannot cover these costs out of pocket. Moreover, Medicare won’t pay for long-term care. Most elderly individuals, therefore, turn to the Medicaid program which does cover long-term care costs. The problem, however, is that Medicaid has income and asset limits that cannot be exceeded by program recipients – and those limits are very low.
For applicants whose countable resources exceed the program limits, Medicaid requires them to “spend-down” those resources before providing benefits. In essence, once you have depleted most of your resources Medicaid will step in and help. Medicaid, therefore, does not actually take your assets when you apply for benefits but you may be forced to use most of them to pay for your care anyway unless you included Medicaid planning in your overall estate plan.
The other concern people have relates to the Medicaid “recovery” program that allows Medicaid to recover costs expended on a recipient from that recipient’s estate at the time of death. Again, Medicaid does not actually take those assets but could have a claim to them when you die nonetheless.
The best way to avoid either of these outcomes is to include Medicaid planning in your overall estate plan early on in your life. By doing so you increase your odds of qualifying for Medicaid in the future and ensure that your assets are protected at the same time. Consult with your Missouri estate planning attorney as soon as possible about your Medicaid plan.
- Changing “Irrevocable” Trusts Through Decanting - October 21, 2021
- Taxation of Nongrantor Trusts - October 6, 2021
- Dangers of Do-It-Yourself Estate Planning - September 27, 2021
