In a perfect world, you should create a Medicaid planning component within your estate plan before you reach middle age. Not doing so can put your assets at risk during your retirement years if you reach a point at which qualifying for Medicaid becomes crucial. While it is certainly best to plan for the need to qualify for Medicaid, you may still have options. The Londonderry Medicaid planning attorneys at DeBruyckere Law Offices explain what you need to know about last-minute Medicaid planning.
Are You Facing the Need to Qualify for Medicaid?
At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime. As you have undoubtedly discovered, the cost of that care is not cheap. Nationwide, the average cost of a year in LTC for 2021 was over $100,000. If you are a New Hampshire resident, however, you can expect to pay considerably more than the national average. For that same year, the average yearly cost for a private room in LTC was over $140,000 in New Hampshire.
The real problem, however, comes when you realize that you may be forced to cover those expenses out of pocket. Like many seniors, you may rely on Medicare to pay for most of your healthcare expenses; however, you won’t be able to turn to Medicare for LTC expenses because Medicare won’t cover them. Neither will most private health insurance policies unless you purchased a separate long-term care policy. Not surprisingly, over half of all seniors currently in a LTC facility rely on Medicaid for help paying their bill. For Medicaid to help though, you must first qualify for benefits, and if you did not plan for that possibility you may run into problems.
To qualify for Medicaid benefits, you will need to meet Medicaid’s eligibility requirements for seniors, meaning you must meet the income and asset tests. The income limit is tied to the Federal Poverty Level and will change depending on which Medicaid category you apply under, your geographic location, and household size. The income limit is not where most seniors encounter a problem though. It is the extremely low asset limit that typically poses a problem for seniors. In most states, an individual applicant cannot own “countable resources” valued at over $2,000; however, in New Hampshire the limit is $2,500 – still extremely low.
Medicaid does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone. Furthermore, Medicaid’s five-year “look-back” rule prohibits you from transferring your non-exempt assets at the last minute in anticipation of the need to qualify for Medicaid.
Last-Minute Medicaid Planning
While you may not be able to protect all your non-exempt assets through the use of last-minute Medicaid planning strategies, you may be able to protect some. The key is to consult with an experienced Medicaid planning attorney as soon as you realize you need to qualify for Medicaid. The tools and strategies implemented in your situation will depend on your unique circumstances; however, one goal will be to legally convert as many non-exempt assets as possible into exempt assets. For instance, because you’re the equity in your home is an exempt asset (up to a limit), you might be able to take your savings and pay off your mortgage, thereby converting the non-exempt savings funds into exempt equity.
Contact Londonderry Medicaid Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about last-minute Medicaid planning, contact the Londonderry Medicaid planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.