Are you facing the need for nursing home care for yourself or a spouse in the near future? If so, are you worried about paying for the cost of that care? If you are, you are hardly alone. In 2016, the average yearly cost of long-term care (LTC) across the United States was about $80,000. In the State of New York, the average cost of care was over $120,000 a year in 2016 – and those figures are projected to continue to climb for the foreseeable future. It should come as no surprise then that over half of all seniors in a LTC facility turn to Medicaid for assistance covering the cost of their care. If you are considering applying for assistance from Medicaid, you need to have a firm understanding of the eligibility requirements first so you can know what to expect. If you failed to incorporate Medicaid planning into your estate plan prior to this point, and you have any non-exempt assets, you may find yourself facing a significant hurdle to eligibility. Moreover, transferring those assets isn’t an option thanks to the Medicaid five-year look-back period.
Why Is Qualifying for Medicaid So Important?
Unfortunately, some people find out too late that Medicaid may be their only hope of receiving help with the high cost of LTC. Although Medicare will cover basic healthcare needs, it does not cover LTC expenses unless they follow a stay in the hospital – and even then, Medicare will only cover up to 100 days of LTC costs. Don’t look to your basic health insurance coverage either as most basic healthcare policies exclude LTC expenses unless you purchased a separate LTC policy at an additional expense. It is for these reasons that so many seniors end up turning to Medicaid for help with the nursing home expenses.
The Medicaid Five-Year Look-Back Rule
Medicaid uses both an income and a “countable resources” limit when evaluating applicants because the program is intended to assist low income individuals, families, the aged and the disabled with healthcare expenses. The countable resources limit is extremely low. The Medicaid five-year look-back rule prevents you from simply transferring those assets when you realize you need coverage. The rule allows Medicaid to review your finances for the five-year period prior to your application for benefits. Any asset transfers for less than fair market value may be discounted and the value of the asset imputed back into your estate for the purpose of determining eligibility for Medicaid benefits. If your assets exceed the program limit, a waiting period will be imposed during which time you will be expected to “spend-down” your excess assets. Basically, the “spend-down” requirement simply means you are expected to liquidate any “excess” assets and use the funds to cover your LTC expenses during the waiting period. The end result is that you could lose a significant portion of your retirement nest egg if you are forced to “spend-down” in order to qualify for Medicaid.
How Can a New York Estate Planning Attorney Help?
Ideally, Medicaid planning should be part of your estate plan long before you actually need to qualify for Medicaid. When that is the case, the five-year look-back rule does not negatively impact your estate. If, however, you find yourself in need of Medicaid benefits and you did not include Medicaid planning in your estate plan early enough, you should still consult with an experienced New York estate planning attorney because there are often last minute Medicaid planning strategies that may help protect at least some of your assets.
For more information, please download our FREE estate planning worksheet. If you have questions or concerns about the Medicaid look-back rule, or about Medicaid planning strategies, contact an experienced estate planning attorney at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.