Like many people, one of your primary objectives in creating an estate plan is likely to ensure that loved ones are well provided for after you are gone. Of course, that objective can only be met if your estate has sufficient assets left in it at the time of you death. What many people fail to factor into their estate plan is the possibility of a hefty end of life long-term care bill. Given the exorbitant cost of long-term care, coupled with the odds of you, or your spouse, needing that care, there is a very real risk that your estate assets will be depleted at the time of your death, making your goal of providing for loved ones impossible to reach. The good news is that by including a Medicaid planning component in your estate plan you may be able to cover long-term care costs and hold onto your estate assets.
Will You Need Long-Term Care?
We all hope to live to the age of 100, remain in our own home, and have all our faculties in place at which time we can die peacefully in our sleep. While there is no reason to give up that hope, it is also wise to face the reality that you could end up in a nursing home or other long-term care facility at the end of your life. In fact, the odds of needing long-term care increase with each passing year. At retirement age (65) your odds of eventually needing long-term care are about 50-50. If you are still here at age 85 those odds jump to 75-25. If you are married, your spouse has the same odds making it even more likely that one of you will eventually be unable to remain in your own home. If either, or both, of you end up needing long-term care, the cost of that care could create a significant issue for your estate plan.
Long-Term Care Costs in Florida
Because most people prefer not to dwell on the possibility that they will need long-term care down the road, they also have very little idea what that care will cost if it is needed. If you are one of those people, you need to know. Nationwide, the average yearly cost for a semi-private room in a long-term care facility is just over $80,000 as of 2015. For a private room, expect to pay about $91,000, on average. The State of Florida falls just above the national average in terms of long-term care costs with a semi-private room costing around $87,000 and a private room almost $97,000 per year. With an average length of stay of 2.5 years, it becomes easy to see how quickly your estate assets could be depleted if you are forced to cover those costs out of pocket.
What about Insurance?
Right about now you are likely wondering why you can’t count on insurance to cover long-term care expenses should you incur them? The problem with relying on insurance is that most health insurance policies do not cover long-term care costs unless you purchased a separate long-term care rider at an additional cost. Do not count on Medicare either as the program also excludes long-term care expenses except in very limited circumstances, and even then only for a short period of time. The one insurance program that will cover long-term care costs is Medicaid. While this is good news, qualifying for Medicaid often presents a problem for seniors because of the very low asset limit that cannot be exceeded.
What Is Medicaid Planning and Why Do I Need It?
To qualify for Medicaid benefits you must have income and assets that do not exceed the program limits. If your assets exceed the program limit you will be expected to rely on your available assets before Medicaid will start covering your long-term care costs. Transferring assets in anticipation of applying for Medicaid will not work either because Medicaid employs a five year “look-back” period that effectively discounts assets transferred made by you during the five-year period prior to your application. What you can do now, however, to ensure that you are in a position to qualify for benefits without losing assets is to include Medicaid planning in your overall estate plan. Medicaid planning uses legal strategies and tools to protect assets while simultaneously lowering the value of your “countable resources.” This, in turn, puts you in a position where you will be eligible for Medicaid benefits should you need them down the road.
For more information, please download a free copy of our “Solid Estate Plan Checklist.” If you have additional questions about Medicaid planning in the State of Florida please contact the experienced estate planning attorneys at Kulas Law Group, P.A. by calling 772-398-0720 to schedule an appointment.