Before you assume your private healthcare insurance will help cover long-term care costs, think again. First, most employer sponsored insurance plans terminate when you reach retirement age. Plans that do continue into your retirement years are unlikely to cover long-term care costs unless you purchased a separate, and usually costly, long-term care coverage rider. Medicare isn’t an answer either as the Medicare program only covers expenses related to long-term care under very limited circumstances and then only for a very short period of time.
The good news is that the Medicaid program does cover long-term care costs. The not so good news is that qualifying for Medicaid without losing your hard earned assets can be tricky. The reason for this is that there is both an income and an asset test for Medicaid applicants.
When you apply for Nursing Home Medicaid benefits your application is subject to a five year “look-back” period. What this means is that your finances for the five year period prior to the date of your application will be scrutinized. Any asset transfers made during that five year period may be disregarded and the value of the asset transferred effectively imputed back into your estate. For example, imagine that you and your spouse owned a vacation home worth $100,000. About a year ago you began to foresee the need for long-term care for your spouse and the corresponding need to qualify for Medicaid benefits to help pay for that care. Knowing the value of the vacation home will disqualify you for benefits you gifted it to your adult daughter shortly thereafter. Pursuant to the five year ‘look-back” period rules, when Medicaid reviews your application they will likely disregard that gift and add the $100,000 back into your “countable resources.”
If your assets exceed the program limit, you will effectively be required to use your available assets before Medicaid will start helping. Your life savings can be gone in a matter of months if you are forced to pay out of pocket for long-term care.
Incorporating Medicaid planning into your estate plan is the best way to make sure that your assets are protected while still ensuring that you qualify for Medicaid should the time come that you need help paying for long-term care. Medicaid planning uses perfectly legal tools and strategies to remove assets from your “countable resources” well ahead of time so that your estate is in a position to qualify for benefits when you apply for them.
If you have additional questions or concerns about how you can include charitable gifting in your estate plan, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia,. by calling 800-295-1917 to schedule your appointment.