Whether you are aware of it or not, there is a very good chance that you will turn to Medicaid for help covering your long-term care costs at some point in the future. When that time comes, you will need to qualify for Medicaid benefits, which can be challenging if you failed to plan ahead. Unfortunately, that is exactly the position many seniors find themselves in when they realize that Medicaid is their only option for help paying for the high cost of long-term care. Moreover, by failing to include Medicaid planning in their estate plan, many seniors find their hard-earned assets at risk when they suddenly need to qualify for Medicaid. The best way to avoid finding yourself in this position is to learn more about Medicaid now. With that in mind, consider the following five things every senior needs to know about Medicaid eligibility.
- About half of all seniors eventually need to qualify for Medicaid. Like many seniors, you might have gone through your entire working years without ever needing to qualify for Medicaid benefits, only to realize that Medicaid is your only option for helping with the high cost of long-term care (LTC) as a senior. When you enter your retirement years you stand about a 50-50 chance of eventually needing LTC. At age 85, those odds increase to a 75 percent chance. If you do need LTC, you will most likely find that your health insurance policy will not cover LTC. Medicare won’t help either as it only covers LTC under very narrow circumstances, and then only for a maximum of 100 days. Because Medicaid will cover LTC, it may be your only option.
- Medicaid eligibility depends on your income and the value of your assets. Because Medicaid is intended to provide healthcare for low income recipients, there are eligibility limits that apply to your income and assets. If you are a senior on a fixed income the income limit may not pose a problem; however, the asset limit does pose a problem for seniors who failed to plan ahead.
- Transferring assets at the last minute won’t work. If your assets exceed the limit you may wonder why you can’t just give them to your children – that’s what you plan to do eventually anyway. Unfortunately, that won’t work because Medicaid uses a five-year “look-back” period. Asset transfers for less than fair market value made during the five-year period prior to your application will likely be discounted and the value of the asset(s) imputed back into your estate.
- If your assets exceed the program limit you will have a “waiting period” during which time Medicaid will not cover your expenses. If the value of your assets exceed the program eligibility limit, Medicaid will impose a waiting period during which time you will be responsible for your LTC expenses. The length of the waiting period is determined by a formula that divides the amount in excess of the assets limit by the average monthly cost of LTC. For example, assume that the value of your assets exceeded the asset limit by $40,000. The average monthly cost of LTC in the State of New York is about $11,000. (40,000/11,000 = 3.64) Therefore you would have to cover your own LTC expenses for four months before Medicaid would start helping.
- The Medicaid “Spousal Impoverishment” rules will protect a community spouse. One thing that concerns many seniors when they apply for Medicaid is how the income and asset rules will impact a spouse that remains in the home, referred to as a “community spouse.” Fortunately, the Medicaid “Spousal Impoverishment” rules prevent a community spouse from being left with nothing. The rules allow the community spouse to keep a percentage of the assets as well as a portion of the LTC spouse’s income if the community spouse has very little income of his/her own.
The best way to ensure that you will qualify for Medicaid without putting any of your assets at risk is to include Medicaid planning in your estate plan well ahead of the time you might need long-term care.
If you have questions or concerns relating to Medicaid planning, contact the experienced New York estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.