Long-term care planning is a critical aspect of protecting your financial and personal well-being as you age. Since Medicare won’t cover most forms of custodial care, the high costs of assisted living, nursing homes and even in-home care can deplete savings quickly. By planning ahead, you can preserve your assets while ensuring access to quality care.
This guide explores key strategies, including Medicaid planning (Medicaid can cover long-term care for some Oklahomans) and the use of specialized trusts, to help you navigate long-term care costs and secure your future.
Understanding Long-Term Care Costs in Oklahoma
Long-term care includes a range of services designed to support individuals with chronic illnesses, disabilities, or other conditions requiring assistance with daily activities. These services can include nursing home care, assisted living, or in-home care.
In Oklahoma, the costs of long-term care are significant. The average cost of a private room in an Oklahoma nursing home or long-term care facility exceeds $6,500 per month, and that price tag is rising every year. For many families, covering these expenses without some form of financial assistance is unsustainable.
Medicaid Eligibility and Planning
Medicaid is a joint federal and state program that provides healthcare coverage, including long-term care, to individuals with limited income and assets. To qualify in Oklahoma, you must meet strict financial eligibility requirements, which often necessitate careful planning.
Asset Limit
Currently, an individual person’s countable assets must not exceed $2,000. This is an extremely low threshold, and most Oklahomans will have trouble qualifying.
Without planning, individuals often spend down all of their assets to meet this threshold, leaving little or nothing to pass on to the next generation. However, Medicaid planning strategies can help protect your assets while still qualifying for benefits.
Strategies to Protect Assets
Medicaid planning involves using legal tools to restructure your finances and preserve assets for your loved ones to inherit. Considering your options is important to choose an effective strategy that fits your personal situation.
Pre-Planning: Irrevocable Medicaid Trust
An irrevocable Medicaid trust allows you to transfer assets out of your name while still benefiting from them indirectly. However, the Medicaid rules in Oklahoma can be very strict about how these types of trusts are operated.
By placing assets in this type of trust, after five years, they are excluded from Medicaid’s asset calculation. This strategy requires planning well in advance, as any transfers made within sixty months (five years) of applying for Medicaid could result in penalties or disqualification.
Spousal Protections
When only one spouse requires long-term care, Medicaid provides certain protections for the healthy spouse (known as the community spouse). These include:
- Community Spouse Resource Allowance: The healthy spouse can retain a portion of the couple’s assets.
- Income Allowance: The healthy spouse may receive a portion of the institutionalized spouse’s income to maintain their standard of living.
Proper planning ensures the community spouse can remain financially stable while the other spouse receives the care they need.
Spend-Down Strategies
If your assets exceed Medicaid’s limits, a spend-down strategy can help you qualify while also benefiting your loved ones. This may involve:
- Paying off debts, such as a mortgage or medical bills.
- Purchasing exempt assets, such as home improvements or a vehicle.
- Prepaying funeral, burial and legal expenses.
- Utilizing a Medicaid-Compliant Annuity for liquid funds.
These actions reduce your countable assets while providing value to you or your family.
Benefits of Planning Ahead
Planning for long-term care in advance provides significant benefits:
- Asset Protection: Preserve your savings and property for your loved ones.
- Access to Care: Ensure you qualify for Medicaid or other programs without financial hardship.
- Peace of Mind: Reduce stress for you and your family by having a clear plan in place.
Without proper planning, families often face rushed decisions during a crisis, leading to unnecessary financial strain.
Final Thoughts
Long-term care planning in Oklahoma involves a delicate balance between financial protection and access to quality care. By exploring your Medicaid planning options with an experienced attorney, you can create a strategy that preserves your assets and meets your needs.
Taking proactive steps today ensures your future is secure and relieves your family of unnecessary burdens. With thoughtful planning, you can enjoy peace of mind knowing your legacy and well-being are safeguarded.
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Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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