Most Americans recognize the need for estate planning, yet over half of them do not have an estate plan in place. The same can be said for the need to include Medicaid planning into a comprehensive estate plan. People generally acknowledge the need to incorporate Medicaid planning into their estate plan, but those same people frequently put off doing so – often until it is too late to benefit from many of the Medicaid planning tools and strategies. If you never got around to creating a Medicaid plan, and now need to qualify, you are undoubtedly wondering when is it too late to consult with a Medicaid planning attorney?
Why Would You Need to Qualify for Medicaid?
The primary reason people fail to include Medicaid planning in their estate plan is that they have never before needed Medicaid benefits. As a senior, however, that could change rather quickly if you need long-term care (LTC) because Medicaid may be your best option for covering the high cost of that care. Nationwide, the average monthly cost of LTC runs about $6,500, or just over $80,000 per year as of 2016. In the State of New Hampshire, however, you can expect to pay considerably more than the national average. In 2016, the average monthly cost of LTC in New Hampshire was about $10,000. Given that the average length of stay is 2.5 years, you could easily be facing a LTC bill of over $300,000.
Like most seniors, you will probably rely on Medicare to cover the majority 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 help with LTC costs.
Will You Qualify for Medicaid?
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 with regard to 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 need for benefits.
Because Medicaid is intended to provide health care 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 very low — $2,000 for an individual in most states.
If you fail the test, Medicaid will deny your application until such time as your countable assets fall below the acceptable limit. Simply giving assets away, however, isn’t 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.
Can a Medicaid Planning Attorney Help Me If I Need to Qualify Now?
Planning ahead for the likelihood that you will need to qualify for Medicaid is ideal; however, 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. It is definitely worthwhile to consult with a Medicaid planning attorney before applying for benefits to see what last minute Medicaid planning options you may have.
Contact Medicaid Planning Lawyers
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about Medicaid planning, contact the experienced Medicaid planning lawyers at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
Daniel DeBruyckere
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