If you are still several years away from your retirement years, and you have never before needed to qualify for Medicaid benefits, you may wonder why you keep hearing about the need to include Medicaid planning in your estate plan. You are not alone. Many people fail to understand the need to plan ahead for the possibility that they will one day turn to Medicaid for help. Because that possibility is more likely than you realize, and because the need to include Medicaid planning in your estate plan is also more important than you may realize, the Vero Beach Medicaid attorneys at Kulas & Crawford explain why you need to plan ahead.
Will You Need Long-Term Care?
The potential need to qualify for Medicaid benefits during your retirement years all begins with the possibility that you will need long-term care (LTC) as a senior. When you enter your retirement years, around age 65, you will already stand a 50 percent chance of needing LTC at some point prior to the end of your life. The longer you live, the more likely it becomes that you will need LTC. BY age 85, your odds of winding up in LTC will have increased to a 75 percent chance. Keep in mind as well, that if you are married, your spouse has the same odds as you do of one day needing LTC.
How Will You Pay the High Cost of Long-Term Care?
Aside from the fact that you may not look forward to spending time in a LTC facility, the real issue with your potential need for LTC is the cost of that care. Nationwide, the average cost of a month in LTC for 2016 was about $6,500. If you are a resident of the State of Florida, you can expect to pay, on average, about $8,000 per month for LTC. At an average length of stay of 2.5 years, you could easily incur a long-term care bill of over $250,000.
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. Even when Medicare does cover LTC costs it will only do so for a very limited period of time. By the same token, 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 depleted if forced to cover LTC costs out of pocket. This is where the need to qualify for Medicaid comes in because Medicaid does help with LTC costs.
Why Planning Ahead Is Essential
The catch with Medicaid helping is that if you failed to plan ahead you might not qualify – at least not without losing a significant chunk of your retirement nest egg anyway first. Medicaid uses both an income and an asset limit when determining eligibility. The asset limit is low — $2,000 for an individual in most states – which is where most seniors run into problems. If your non-exempt assets are worth more than the limit, Medicaid will impose a waiting period, commonly known as Medicaid “spend-down.” In essence, Medicaid will expect you to rely on your assets to pay your LTC expenses until those assets are gone. Only then will Medicaid start to help with your LTC bills. Transferring assets at the last minute is not an option either because Medicaid uses a five-year “look-back” rule that allows the program to review your finances for the five-year period prior to your application. Any asset transfers uncovered for less than fair market value will likely be disallowed and the value of the asset imputed back into your estate for the purpose of determining your eligibility. The key, therefore, to holding onto your assets and qualifying for Medicaid when you need it is to plan ahead by including Medicaid planning in your overall estate plan.
Contact Vero Beach Medicaid Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding Medicaid planning, contact the experienced Vero Beach Medicaid planning attorneys at Kulas & Crawford by calling (772) 398-0720 to schedule an appointment.