Although your initial estate plan will likely focus primarily on the distribution of your estate assets after you are gone, that plan should grow and expand to include additional goals and objectives. One of the additional components you choose to add to your estate plan should be long-term care planning. An Overland Park Medicaid attorney at Parman & Easterday explains why long-term care planning is important.
The Cost of Long-Term Care
When you reach retirement age (at age 65) you will already stand at least a 50-70 percent chance of eventually needing some type of long-term care. Every year that passes, those odds go up. If you are fortunate enough to still be here at age 85, your odds of needing LTC will have increased to 75 percent. Don’t forget, if you are married, your spouse shares the same odds of needing LTC. Nationwide, in 2019 the average cost of a year in LTC was over $100,000. Residents of Kansas and Oklahoma were fortunate to pay less than the national average with a year of LTC running about $67,000-$80,000. The cost of long-term care could deplete your retirement nest egg in short order if you are forced to pay out of pocket. This is why long-term care planning is important.
Long-Term Care Planning
Most retirees quickly learn to depend on Medicare to cover most of their healthcare expenses since almost all seniors qualify for Medicare automatically upon reaching retirement age. Unfortunately, Medicare will not cover LTC expenses. Neither will most basic health insurance policies. Unless you can afford to pay out of pocket or purchase a separate LTC insurance policy, Medicaid is likely your only hope for help in covering your LTC bill.
Because it is intended to help low-income recipients, Medicaid uses both an income and an asset threshold that cannot be exceeded if you wish to qualify. The asset limit is typically very low — $2,000 for an individual in most states. While some primary assets, such as your home or a single vehicle, are exempt, most seniors who have been saving for decades have assets that exceed the limit. Furthermore, the Medicaid rules prohibit the transfer of assets within five years of applying for benefits. Transfers in violation of the five-year “look-back” rule could result in Medicaid imposing a waiting period before you are eligible for benefits. If your assets exceed the countable resources limit, your application will be denied, and you may have to “spend-down” those assets.
The best way to prevent the loss of assets and ensure you are eligible for Medicaid if you need it is to include long-term care planning in your estate plan now.
Contact a Parman & Easterday Medicaid Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding long-term care planning, contact an experienced Overland Park Medicaid planning attorney at Parman & Easterday by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.
If the value of your countable resources exceeds the Medicaid eligibility limit you will be turned down for benefits. At that point, you will be required to “spend-down” (which means spend or use up) those assets until the combined value falls below the asset limit.
No. Some assets are exempt from the resource limit. Each state decides which assets are exempt. In most states your primary residence, a vehicle, a burial plot, and personal belongings are exempt.
Because you have no way of knowing when you might need to qualify for Medicaid, you should talk now to your estate planning attorney about incorporating a Medicaid planning component into your estate plan. Spending a little now could save a lot later.