When you enter your retirement years you stand about a 50 percent chance of eventually needing long-term care, or LTC. If you are still here at age 85, the odds that you will need LTC before you die increase to about a 75 percent chance. If you are married, your spouse has the same odds, thereby increasing the likelihood that one of you will eventually need LTC. The cost of that care is the reason you may turn to Medicaid. Qualifying for those benefits, however, can be complicated. Understanding the senior requirements for Medicaid can help you to plan ahead by including Medicaid planning in your overall estate plan.
How Will You Pay for LTC?
The biggest problem with the cost of LTC is how you will pay for it. Nationwide, the average cost for a year in LTC is about $80,000. The State of New York is considerably more expensive, with the average cost of a year in LTC running over $144,000. With an average stay of 2.5 years, it is easy to see how LTC costs could quickly deplete your assets if you have no other options – and your options will likely be limited. Most basic health insurance plans exclude LTC expenses unless you purchased a LTC rider at an additional cost. Don’t count on Medicare to help either as the Medicare problem also excludes LTC costs except in very limited circumstances.
What Counts as Countable Resources?
What counts as a countable resource? Anything you own is a countable resource unless is falls into one of the exemption categories. Examples of assets that are exempt, and therefore not counted when determining the value of your countable resources for Medicaid eligibility determination in New York, include:
- family residence, only under certain circumstances
- irrevocable pre-paid burial expenses
- personal and household property
- one automobile
- any life insurance policies with a face value of less than $1,500.
Income and Resource Limits
Keep in mind that the limits for both income and the value of your countable resources are subject to change – and do change – on a yearly basis.
Can’t I Just Transfer Assets to My Children If I Need to Qualify for Medicaid Benefits?
No. There was a time when you could do just that; however, Medicaid instituted a five-year “look-back” rule that effectively allows a review of your finances for the five-year time period prior to your application for benefits. Any asset transfers during that time period for less than full market value will likely be flagged and the value of the transferred asset will be added back into your countable resources total. If your resources exceed the program limit you will be forced to go through a waiting period during which time you will be ineligible for benefits. During this “spend-down” period you will be expected to rely on your assets to cover your LTC costs. In short, failing to plan ahead by including Medicaid planning in your overall estate plan could put your entire nest egg at risk if you need LTC down the road.
For more information, please download our FREE estate planning worksheet. If you have questions or concerns relating to the requirements for Medicaid, contact the experienced estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.