Medicaid planning is a vital part of any good estate plan. Most of us will eventually require nursing home care in our old age, and such care is expensive: the average yearly cost for a semi-private room in Virginia is over $90,000, which can deplete your savings fast.
Most private healthcare policies will not cover long-term care costs unless you paid for an applicable rider, and Medicare does not cover such expenses except in the wake of a hospital stay, and even then the maximum coverage period is 100 days.
Fortunately, Medicaid will pay for the long-term care costs of those who qualify. To meet the eligibility criteria for Medicaid, however, your income and assets must be below a certain threshold. It may be possible that your resources, which you spent a lifetime saving, will cause you to exceed the asset limit and result in you being denied benefits until most of those assets are exhausted.
With so many contingencies surrounding your access to Medicaid, planning early and strategically is important. Here are four common mistakes people make during the planning process, as well as information on how to avoid them.
Waiting too Long to Start Planning
Like many important things in life, planning for Medicaid should be done long before you actually need it to cover your nursing home costs. Waiting too long could require you to exhaust a good portion of your financial assets to meet the program’s means test, a strategy that can result in delayed or denied coverage.
Giving Away Assets
Medicaid has a five-year ‘lookback period’, which checks for the sale or transfer of any assets during the five years prior to your application. If such activity is detected, the time you have to wait for Medicaid coverage will be equal to the value of those assets divided by the average cost of monthly nursing home care in your area. Planning early can help you bypass this stress and hassle.
Creating the Wrong Type of Trust
Proper Medicaid planning includes transferring your assets into a trust, but not just any type. Assets in a revocable living trust, for example, are regarded as available to pay for care costs and therefore included in the calculation of your resources unless an exemption applies.
Any trust created for Medicaid planning purposes must be irrevocable, so that the assets it contains are not considered available to you. Assets in a special needs trust are also regarded as unavailable to the beneficiary, and therefore do not impair your eligibility for means tested benefits like Medicaid.
Failing to Consult an Attorney
Medicaid is a complicated area of estate planning, as the rules are constantly changing. Well-meaning friends may give you planning advice that worked for them or someone they know, but there is no substitute for the knowledge and experience of a qualified estate planning attorney.
Take the Worry Out of Your Future
You worked hard all your life and are entitled to both receive long-term nursing care and leave a legacy for your loved ones. At Norton Pelt, PLC, we will help you plan strategically for your future Medicaid needs. For more information or to schedule a confidential consultation, contact us today.
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