The high costs associated with nursing home care in the United States can be a major concern for many seniors and their families. If you know or suspect that you might need long-term care, you too may be worried about the prospect that all of your hard-earned retirement savings might be consumed by those costs – and there’s good reason for that concern. The fact is that nursing home care can exceed $200 a day in many areas of Indiana, and few seniors can afford those kinds of expenses. There is good news though: if you want to beat the high cost of nursing home care, a Medicaid attorney in Indianapolis may be able to help.
There are good reasons to try to avoid those costs, of course – including the desire to preserve at least some of your assets. In fact, the desire to protect assets from being consumed by nursing home bills is one of the main reasons for Medicaid planning throughout the United States. Seniors rarely want to be put in a position where they become entirely dependent upon some government program. Most would also like to ensure that they maintain at least some part of their estate to leave to their heirs when they die. If you simply accept that everything you own must go toward nursing home bills, then you will likely end up being destitute and dependent, with no legacy to pass on to your loved ones.
Medicaid Eligibility
The first thing to understand is that this is all about Medicaid eligibility. Since eligibility is determined by your total assets and income, you have to have very little actual wealth to qualify. On the surface, that requirement would seem to suggest that you must be basically impoverished before you can receive benefits. Fortunately, the real issue here involves the types of assets that Medicaid can count when determining your eligibility. That’s where Medicaid planning comes into play.
Medicaid Planning
Medicaid planning is a form of estate planning that works to convert as many of your countable assets as possible into non-countable assets. The process begins with identifying the various assets you own, and determining which are countable and which are exempted from eligibility consideration. Exempt assets include a wide variety of valuable items that Medicaid ignores: your home and its contents, one car, a prepaid funeral contract and burial plot, burial funds, irrevocable trusts, and up to $2,000 in assets.
The problem for most people who need Medicaid planning is what to do with all of the many countable assets they might own. These can include things like property that the owner can liquidate, cash, bank accounts, money market accounts, securities, CODs, any revocable trusts, retirement accounts, vehicles, if the individual owns more than one, and real estate holdings other than the primary place of residence. These assets need to be either liquidated and used to pay for care, or somehow removed from consideration by the Medicaid program.
Assets Protected for Your Community Spouse
One thing that you shouldn’t need to be worried about is the impoverishment of your spouse. If you need nursing home care and your spouse doesn’t, he or she is entitled to keep a portion of your combined countable assets, to prevent impoverishment. Of course, the rules relating to this aspect of Medicaid eligibility can be tricky for many seniors to navigate, but an experienced Medicaid attorney can help to make sense of it all and ensure that your spouse is properly cared for.
Removing Assets from Eligibility Consideration
One of the most commonly used strategies seniors rely on to meet program income and asset limits involves giving away their property. Many believe that if they put their assets in someone else’s name, then Medicaid won’t be able to find those assets or count them when determining eligibility. There was a time when that was true, of course – but no longer. Thanks to Congressional action on Medicaid, the program now reviews transfers made during the five-year period prior to any application for benefits – and can assess penalties if it determines that you made transfers for less than the existing fair market value of those assets.
When such transfers are discovered, you can end up being declared ineligible for benefits for a period that is determined by the overall value of the transfers made. Worse, you will have to actually be in the nursing home and paying for your own care before that penalty period even begins! Since that would defeat the entire purpose for the transfers, the wiser course of action would be to avoid those penalties altogether.
How Can You Plan Around these Problems?
Given the fact that you cannot just gift away your estate and still be assured of eligibility, you might wonder how you can ever manage to get around these concerns? Is there even a way to maintain your assets – or some part of them – while still being assured of the Medicaid eligibility you so desperately need? Thankfully, this is not actually as difficult as it might seem. With the right attorney, you can successfully protect your assets and interests, ensure your spouse’s wellbeing, and obtain the program benefits needed to beat the high cost of long-term care.
Medicaid planning can utilize a variety of options to pay for your care, including the use of proper gifting strategies, annuities, irrevocable trusts, and more. Of course, your widest variety of options are always available when you begin planning early – preferably well in advance of your actual need for long-term care and Medicaid benefits. Still, it is never too late to begin to fight back against the high cost of long-term care, even if you are already a nursing home resident.
At Frank & Kraft, Attorneys at Law, our experienced Medicaid attorneys can help to ensure that you make maximum use of all of the options and benefits available to you. If you’d like to learn more about how our team can assist you with your Medicaid planning, or discover how other estate planning strategies can help you achieve your life and legacy goals, contact us at our website or give us a call at (317) 684-1100 today.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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