If you have never before needed to rely on Medicaid to cover your health care expenses, why would you need to include Medicaid planning in your estate plan? Unfortunately, the reality is that many seniors do eventually need to qualify for Medicaid at some point to help cover the high cost of long-term care. If you failed to plan ahead and suddenly find yourself in a position where you need to be eligible for Medicaid, is there anything you can do? The Indianapolis Medicaid planning attorneys at Frank & Kraft explain how last minute Medicaid planning may still be able to help you.
Why Might You Suddenly Need to Turn to Medicaid for Help?
Nationwide, the average yearly cost of long-term care was over $100,000 for 2019. In Indiana, you can expect to pay about the same as the national average. Considering an average stay of around three years, you could easily be facing an LTC bill of close to half a million dollars if forced to pay out of pocket.
Like most seniors, you will probably rely on Medicare to cover most of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under very limited circumstances, and even then, only for a very limited period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Therefore, unless you purchased a standalone long-term care insurance policy prior to the need for coverage, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs if forced to pay for them out of pocket. This is where the need to qualify for Medicaid comes in because Medicaid will cover LTC costs for those who qualify.
Qualifying for Medicaid
Knowing that Medicaid does cover LTC expenses only helps you if you qualify for the program. Medicaid is a healthcare program that is primarily funded by the United States government, although each state has the option to supplement funding as well. Although Medicaid is a federal program, it is administered by the individual states. For this reason, you will find some variation among the states regarding eligibility guidelines and benefits offered to participants. In every state, however, Medicaid is what is referred to as a “needs based” program, meaning that an applicant must demonstrate a financial need to be approved for benefits.
Because Medicaid is intended to provide healthcare benefits to low income individuals and families, eligibility for Medicaid is determined, in part, by an applicant’s income and “countable resources.” Income limits are established on a yearly basis and are based on household size and the Federal Poverty Level (FPL) for the geographic area where the applicant lives. “Countable resources” refers to the value of an applicant’s non-exempt assets. The countable resources limit is typically exceptionally low – around $2,000 for an individual in most states.
If your countable resources exceed the limit, Medicaid will deny your application until such time as your countable resources fall below the acceptable limit. Simply giving assets away, however, is not a solution because Medicaid also uses a five-year “look-back” period that allows Medicaid to review your finances for the five-year period prior to application. If you made asset transfers for less than fair market value, Medicaid will flag those transfers and may impose a waiting period based on those transfers. This is why including Medicaid planning in your estate plan early on is so important.
Is It Too Late to Get Help Qualifying for Medicaid?
Ideally, everyone should plan ahead to ensure that they qualify for Medicaid should the time come that they need to; however, many people don’t do so. The good news is that there are some perfectly legal last-minute Medicaid planning strategies that may still be able to help you if you suddenly need to qualify and did not plan ahead. For example, you might be able to convert a non-exempt asset into an exempt asset by using cash to pay down the mortgage on your primary residence. If you need to qualify for Medicaid, don’t just assume that you won’t. Instead, consult with an experienced Medicaid planning attorney to find out what last-minute Medicaid planning tools and strategies might be able to help.
Contact Indianapolis Medicaid Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about last minute 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.
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