Experienced estate planning attorney typically advise clients to incorporate a Medicaid planning component in their estate plan long before they reach retirement age. For one reason or another, however, you may not have done so and are suddenly facing the need to qualify for Medicaid. As you may now realize, the need to qualify for Medicaid can put your hard-earned assets at risk causing you to wonder if it is too late for Medicaid planning to help. As we, the Owings Mills Medicaid planning attorney at Gershberg & Associates, LLC explain, it may not be too late to plan for Medicaid to help you if you find yourself facing the need to qualify for Medicaid.
Why Would I Need to Qualify for Medicaid?
Around retirement age, we all stand close to a 70 percent chance of eventually needing some type of long-term care (LTC) services in the future. The cost of LTC, should you need it, will be high. Nationwide, the average cost of a year in LTC for 2021 was over $100,000. As a Maryland resident, however, you will likely pay more than the national average, with the average running over $140,000 per year in 2021.
While the high cost is troubling by itself, the bigger problem may only become apparent when you realize that Medicare will not cover your LTC expenses. The same goes for most private health insurance policies unless you purchased a separate long-term care policy. The good news is that Medicaid does cover LTC. As a result, over half of all seniors currently in an LTC facility rely on Medicaid for help paying at least some of their LTC bills. First, however, you must qualify for Medicaid which can be challenging if you did not include Medicaid planning in your estate plan.
Why Is Qualifying for Medicaid a Challenge?
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 the Medicaid category, 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 who did not plan accordingly. 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.
It May Not Be Too Late for Medicaid Planning to Help
The best way to ensure that all your assets are protected is to plan early and plan well. While last-minute Medicaid planning may not be able to protect all your assets, it can often protect some of them. The key to getting the most out of last-minute Medicaid planning is to consult with an experienced Medicaid planning attorney the moment you realize you might need help from 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. One common strategy is to take non-exempt assets, such as cash or investment accounts, and use them to pay off or pay down a mortgage. Because the equity you have in your primary residence is exempt (to a maximum limit), you may be able to convert those non-exempt assets into exempt assets.
Contact Owings Mills Medicaid Planning Attorney
For more information, or if you have additional questions or concerns about how Medicaid planning can help you at the last minute, contact experienced Owings Mills Medicaid planning attorney, Richard L. Gershberg and his team at Gershberg & Associates, LLC by calling 410-654-3850 to schedule an appointment.