As you plan for your retirement years, you are likely focused on saving enough money to live comfortably when you reach your “Golden Years.” You may have a financial advisor who is helping you to project what your expenses will likely be and determine the best way to reach your retirement savings goals. One thing you may not have factored into your retirement plans yet is the likelihood that you, or a spouse, will need long-term care. If you do end up needing long-term care (LTC) you may find yourself turning to Medicaid for help covering the cost of that care. LTC expenses are something that should be considered within your retirement plans and your comprehensive estate plan.
Will You Need Long-Term Care?
As you age, the likelihood of needing LTC increases dramatically. When you enter your retirement years, around age 65, you stand about a 50 percent chance of eventually needing LTC. If you are married, your spouse has the same odds. The longer you live, the more those odds increase. If you are still here at age 85, your odds will have increased to a 75 percent chance of one day needing LTC, and the cost of that care will be high. Nationwide, the average monthly cost of LTC runs about $6,500, or just over $80,000 per year as of 2016.
How Will You Pay for LTC?
Like most seniors, you will probably rely on Medicare to cover the majority of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under very limited circumstances, and even then, only for a very limited period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Therefore, unless you purchased a standalone long-term care insurance policy prior to the need for coverage, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs if forced to pay for them out of pocket. This is where the need to qualify for Medicaid comes in because Medicaid will help with LTC costs.
Qualifying for Medicaid
The possibility of getting help with your LTC expenses is certainly good news; however, qualifying for Medicaid benefits can be problematic for a senior who failed to plan ahead. Because Medicaid is a “needs based” program, applicants must have both income and assets below the program limit to qualify for benefits. Given that the “countable resources” limit (assets) is as low as $2,000 for an individual applicant in most states, it becomes easy to see how a senior might fail the asset test for Medicaid eligibility. If you fail the test, Medicaid will deny your application until such time as your countable assets fall below the acceptable limit. Simply giving assets away, however, isn’t a solution because Medicaid also uses a five-year “look-back” period that allows Medicaid to review your finances for the five-year period prior to application. If you made asset transfers for less than fair market value, Medicaid will flag those transfers and may impose a waiting period based on those transfers.
The best way to ensure that you will qualify for Medicaid benefits if you need them during your retirement years is to include Medicaid planning in your comprehensive estate plan now. Doing so will protect your hard-earned assets and ensure that you are eligible for Medicaid benefits as a senior if you need them.
Contact MH Attorneys
If you have additional questions or concerns about long-term care costs and the need for Medicaid planning, contact an attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
- Do I Still Need a Will If I'm Using a Trust to Distribute My Estate? - July 28, 2020
- Planning for Frequent Flyer Miles - September 13, 2018
- How to Make an Estate Plan That Takes Your Family's Needs Into Account - August 16, 2018