If you are still relatively young and have never relied on Medicaid to cover your health care expenses, the idea of including Medicaid planning in your estate plan may seem unnecessary. In reality, however, now is precisely when you probably should incorporate Medicaid planning into your plan. To explain why, an Oklahoma City Medicaid planning attorney at Parman & Easterday offers five reasons to include Medicaid planning in your estate plan.
- As a senior, you may need LTC. To understand why you need to consider adding a long-term care planning component, you need to know why such an addition is beneficial. The need to qualify for Medicaid benefits as a senior will come as a result of your need for long-term care (LTC). The need for long-term care is more likely than you may realize. At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime.
- If you do need LTC, the cost will be high. Across the nation, the average cost of a year in LTC for 2019 was over $100,000. Oklahoma residents pay, on average, less than the national average. For 2019, the average cost of a year in LTC for Oklahoma residents was around $67,000. With an average length of stay of almost three years, you are looking at an LTC bill of over $200,000 for an average stay.
- You probably are not covered for LTC expenses. Although you may rely heavily on Medicare as a senior to cover healthcare costs, Medicare won’t pay for LTC and neither will your average health insurance policy unless you purchased a separate LTC policy. For this reason, more than half of all seniors currently in LTC depend on Medicaid to help cover their LTC expenses. Medicaid will cover LTC expenses; however, you must first qualify for Medicaid benefits.
- The Medicaid eligibility guidelines are complex. Qualifying for Medicaid benefits requires an applicant to meet Medicaid’s eligibility requirements for seniors. That, in turn, means you have to meet the income and asset tests that impose very low limits on the amount of income you can have and the value of non-exempt assets you may own. The income limit is tied to the Federal Poverty Level and will change depending on which Medicaid category you apply under, your geographic location, and household size. The income limit, however, is not where most seniors encounter a problem. It is the extremely low asset limit that typically poses a problem for seniors who did not plan ahead. In most states, an individual applicant cannot own “countable resources” valued at over $2,000 and still qualify for Medicaid. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone.
- Scrambling to qualify for Medicaid at the last minute could result in the loss of assets. Waiting until the last minute to worry about qualifying for Medicaid puts your assets at risk because of the five-year “look-back” rule. The five-year look-back rule allows Medicaid to check for asset transfers made for less than fair market value within the last five years. If any are found, Medicaid may impose a waiting period during which time you will not be eligible for Medicaid benefits. Planning ahead, however, allows you to protect your assets by putting them out of reach. It is for this reason that long-term care planning should be included in your overall estate plan.
Contact a Parman & Easterday Medicaid Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns about Medicaid planning, contact an experienced Oklahoma City Medicaid planning attorney at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.
No. Medicaid does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit.
To ensure that your assets are protected you need to have a plan in place at least five years prior to the need to qualify for Medicaid; however, since you never know when that need will arise, the sooner you incorporate Medicaid planning into your estate plan the better.
While planning ahead is best, an experienced Medicaid planning attorney may be able to utilize last-minute planning tools and strategies to help you protect some (or all) of your assets if you suddenly need to qualify for Medicaid.