As much as you probably don’t want to think about it, the reality is that you may end needing nursing home care at some point later in your life. If the need for nursing home care does come to pass, you may find the cost of that care to be staggering. More importantly, the cost of that care could put your hard-earned assets at risk if you didn’t plan ahead. The Indianapolis Medicaid planning attorneys at Frank & Kraft explain how you can protect your assets from the high cost of nursing home care.
Will You Need Nursing Home Care?
As you age, the odds of needing long-term care increase with each passing year. When you enter your retirement years you already stand a 50-70 percent chance of needing some type of long-term care (LTC) services before the end of your life. The longer you live, the higher the odds that you will end up in a nursing home – and the cost of that care will be high. Nationwide, the average cost for a year in long-term care (LTC) was over $90,000 for 2018. In the State of Indiana, you can expect to pay slightly more than the national average. That same year of LTC averaged about $98,000 in 2018 for Indiana residents. Considering the average length of stay is about three years, your nursing home bill could easily run over $300,000 – and that is if you need LTC now. In just ten years, experts estimate that same LTC bill will run over $400,000.
How Will You Pay for Long-Term Care?
Like most people, you are probably used to relying on health insurance to cover your healthcare expenses. That’s why you pay for health insurance after all, right? While that is true for most health care related expenses, the problem is that most health insurance policies will not pay for LTC unless you purchased a separate LTC policy at an additional expense. As a senior, you may also come to rely on Medicare to cover your health care expenses; however, Medicare won’t be able to help either because the Medicare program only covers LTC expenses when they follow an inpatient hospital stay – and even then, only for a short period of time. Unless you can afford to cover a lengthy LTC stay out of pocket, that leaves Medicaid as your best option for assistance.
How Are My Assets at Risk?
The good news is that Medicaid will help cover your nursing home costs. The bad news is that your assets could be at risk if you need to qualify for Medicaid and you did not plan ahead. Medicaid is a federal healthcare program targeted at providing healthcare services to low-income individuals and families. Because Medicaid is a “needs-based” program, the program uses both income and assets limits when determining eligibility. An applicant cannot own countable resources (assets) valued at more than the limit or the application will be turned down. As an individual applicant, your countable resources cannot exceed $2,000. It is the asset limit requirement that can ultimately threaten your hard-earned assets because if your assets exceed the limit, your application will be denied and you will have to “spend-down” those assets until they fall below the limit. In other words, you could be forced to rely on your retirement nest egg to pay for your nursing home expenses, until those assets are gone and you meet the Medicaid asset limit eligibility requirement.
Fortunately, you can protect your assets and ensure your own eligibility for Medicaid in the future by incorporating a Medicaid planning component into your estate plan now. Within that component, you might, for example, choose to create a Medicaid trust which is a special type of irrevocable living trust designed to protect your assets so you qualify for Medicaid when you need it.
Contact Indianapolis Medicaid Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have questions or concerns related to Medicaid planning, contact the experienced Indianapolis Medicaid planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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.