About half of all seniors who need long-term care end up turning to Medicaid for help with the high cost of that care. When you consider the odds that you may one day need long-term care (LTC) coupled with the number of seniors who count on Medicaid for help with LTC expenses, you stand a good chance of needing to qualify for Medicaid yourself at some point down the road. If you failed to plan ahead for that possibility by incorporating Medicaid planning strategies into your estate plan, you may find that you face challenges to eligibility. One of those challenges is the Medicaid five-year “look-back” period. A better understanding of what the Medicaid look-back period is may prompt you to consider adding Medicaid planning to your overall estate plan now.
Will You Need Long-Term Care?
Unfortunately, there is no way to know who among us will end up in LTC and who will not. We do, however, know the overall odds of needing LTC – odds that increase with each passing year. When you reach retirement age, at age 65, you will stand about a 50-50 chance of eventually ending up in a nursing home or other LTC facility for at least some period of time before you die. If you make it to age 85, those odds increase to about 75-25 in favor of needing LTC. Given those odds, it makes sense to plan for the possibility that LTC will be needed.
Why Will I Need to Qualify for Medicaid?
The cost of LTC is high across the United States with an average cost of $80,000 per year as of 2016. If you live in New Hampshire or Massachusetts, you can expect to pay considerably more than the national average. The average cost of LTC in New Hampshire for 2016 was about $120,000 while Massachusetts came in at over $140,000. What makes the high cost of care worse is that most basic health insurance policies will not cover LTC nor will Medicare. It is for this reason that so many seniors end up turning to Medicaid for help, because Medicaid will cover LTC expenses for those who qualify for benefits.
Medicaid is a federal healthcare program targeted at providing coverage to low income individuals and families as well as the disabled and aged. Each individual state, however, administer the program within the state which is why there are some differences in eligibility requirements and benefits among the states. In all states, however, an applicant cannot have income nor “countable resources” that exceed the program limit. With a countable resources limit as low as $2,000, it is not surprising that many seniors get denied, initially, for benefits.
Transferring Assets and the Medicaid Look-Back Period
If your countable resources exceed the Medicaid limit, you might think that simply transferring assets out of your estate before you apply is the answer. Once upon a time that was the answer – before Medicaid implemented the “five-year look-back period.” Medicaid will review your finances for the five-year period leading up to your application. If any asset transfers were made for less than fair market value (FMV) during that time they will be flagged for further review. Eventually, the value of the transferred asset may be imputed back into your estate if Medicaid is not convinced that there was a reason for the less than FMV transfer other than to qualify for Medicaid. That, in turn, could cause Medicaid to impose a waiting period during which time you would be expected to “spend-down” your excess assets until the total value of your assets is down below the program limit. This is why it is so important to include Medicaid planning in your estate plan long before you actually need to qualify for benefits.
If you have additional questions or concerns regarding the Medicaid look-back period, contact the experienced New Hampshire Medicaid planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.