Umbrella protecting assets
At some point in your life, you may need to qualify for Medicaid, even if you have never before needed to do so. If you are unfamiliar with the Medicaid eligibility guidelines, you may find yourself in a position where your retirement nest egg is at risk because of that need to qualify for Medicaid. The reason for this is based on the Medicaid asset limits. A better understanding of what is considered a countable asset for Medicaid may help convince you of the need to include Medicaid planning in your comprehensive estate plan.
Why Might You Need Medicaid?
If you have never before relied on Medicaid, why might you need to qualify for Medicaid in the future? The need for Medicaid may arise as a consequence of the need for long-term care (LTC) at some point during your later years. With the average cost of LTC at around $100,000 a year nationwide, and an even higher average of almost $150,000 per year in the State of New York, the average person cannot afford to cover that cost out of pocket. Although Medicare will likely cover most of your healthcare costs as a senior, it will not pay for LTC nor will most basic health insurance plans unless you purchased a separate LTC plan. Because Medicaid does cover LTC expenses, over half of all seniors needing LTC turn to Medicaid for help with the cost of that care.
Qualifying for Medicaid
While Medicaid will help cover long-term care expenses for those who qualify, meeting the Medicaid eligibility guidelines can be problematic for many seniors. Because Medicaid is a needs based program, an applicant must demonstrate financial need to be approved. To do that, you must have income and “countable resources (assets)” below the current threshold. The countable assets limit is very low in most states. Because of the high cost of living in New York, the asset limit is actually higher than in most states; however, it is still a hurdle for many seniors. An individual applicant cannot have countable resources (assets) worth more than $15,450 as of 2019. If you do have excess assets at the time you apply, your application will be denied and you will have to “spend-down” your assets before applying again. Fortunately, some assets are exempt, meaning they do not count toward your countable assets for Medicaid.
How Can Medicaid Planning Help?
You may be wondering why you cannot simply transfer assets to an adult child or other loved one if you need to qualify for Medicaid. Though transferring assets was once a solution, Medicaid no longer allows you to make such transfers. In fact, Medicaid now uses a five-year “look-back” period that disallows transfers of assets for less than fair market value for the 60 month period prior to an application for Medicaid. A review of your finances will be conducted when you apply for Medicaid and if any such transfers are uncovered, Medicaid will likely impose a waiting period during which time you will not be eligible for Medicaid benefits. The length of the waiting period will depend on the value of the assets transferred and the average cost of LTC in your area. For example, if you transferred an asset valued at $200,000 with an average monthly cost of LTC in New York of $12,000, you would incur a waiting period of 17 months ($200,000/$12,000). During that waiting period, you will be forced to cover the cost of LTC on your own which will likely cause you to use your retirement nest egg. Medicaid planning incorporates legal tools and strategies into your comprehensive estate plan ahead of time that protect your assets and help ensure your eligibility for Medicaid in the future.
Contact New York Medicaid Planning Attorneys
Please feel free to download our FREE estate planning worksheet. If you have additional questions or concerns regarding Medicaid planning, contact the New York Medicaid planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.
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