If you have worked hard all your life, saved and invested your money wisely, and planned carefully to be able to live comfortably during your retirement years, you certainly don’t want to see something interfere with your financial plan. If you are not careful though, all of your heard-earned money could be threatened during your “Golden Years” by the high cost of long-term care. Unfortunately, people often fail to plan for the likelihood that they, or their spouse, will incur a hefty long-term care bill at some point which could put their retirement nest egg a risk. The good news is that there is a way to protect your nest egg from this particular threat. Medicaid planning, when implemented properly and early on, can go a long way toward protecting your assets and ensuring that you will qualify for Medicaid benefits if you need them in the future.
Will You Need Long-Term Care?
The life expectancy for the average American has almost doubled over the last century. While living longer is certainly good news, it also means you have a greater chance of needing long-term care at some point in your life – and the cost of that care will not be cheap. The odds of needing long-term care increase with each passing year. At retirement age (65) your odds of eventually needing long-term care are about 50-50. If you are still here at age 85 those odds jump to 75-25. If you are married, your spouse has the same odds, making it even more likely that one of you will eventually require long-term care.
How Can Long-Term Care Threaten Your Nest Egg?
If either you or your spouse do end up needing long-term care, the cost of that care is what may threaten your nest egg. Across the nation, the average cost of a year stay in a long-term care facility is around $80,000. In the State of New Hampshire, that same year will cost you, on average, just over $115,000 for a semi-private room or $122,000 for a private room. Given the fact that the average time spent in a long-term care facility is 2.5 years, you could be looking at a bill approaching $300,000. What about insurance? Unfortunately, most health insurance policies do not cover long-term care costs unless you purchased a separate long-term care rider at an additional cost. Do not count on Medicare either as the program also excludes long-term care expenses except in very limited circumstances, and even then only for a short period of time. The good news is that Medicaid does cover long-term care costs if you are eligible for benefits. Qualifying for Medicaid, however, is often problematic for seniors because you must have income and assets that do not exceed the program limits. If your assets exceed the program limit you will be expected to rely on your available assets before Medicaid will start covering your long-term care costs. Moreover, Medicaid uses a five year “look-back” period that effectively disallows any assets transfers made during the five years prior to your application. Therefore, transferring assets when you realize you need to qualify for benefits won’t work.
How Can Medicaid Planning Help?
Medicaid planning uses legal estate planning strategies and tools to create an estate plan that will prepare you and your estate for the likelihood of needing to qualify for Medicaid benefits. By incorporating Medicaid planning into your estate plan early on you can be prepared for the income and assets limits and the five-year look-back test, thereby ensuring that you will be eligible for benefits without losing any of your hard-earned assets. Ideally, you should include Medicaid planning in your estate plan prior to reaching retirement age because you never know when the need for long-term care will become an issue; however, even if you are already within the five year look-back period you may still be able to avail yourself of some of the Medicaid planning strategies by working with an experienced New Hampshire estate planning attorney.
For additional information, please download your free copy of our “Set the Stage for Medicaid Eligibility” pamphlet. If you have additional questions or concerns regarding Medicaid planning, contact the experienced New Hampshire Medicaid attorneys at Debruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.