People often think of the Medicaid program is a program only for low income children or families. While the Medicaid program does indeed provide assistance to low income children and their families, it can also provide critical healthcare coverage to older Americans. Unfortunately, many seniors are unaware that they may need Medicaid coverage at some point in the future and therefore fail to plan accordingly. This frequently leads to the question “When is it too late for Medicaid planning?” The simple answer to the question is that it is never too late; however, the earlier you start Medicaid planning the better.
To understand why you need to include Medicaid planning and your overall estate plan it is essential to understand what benefits the Medicaid program offers and why you might someday need those benefits. People often confuse Medicare and Medicaid. Medicare is a federal program that offers health care coverage to seniors and to a select group of disabled individuals who are under the age of 65. Most people are automatically enrolled in Medicare when they turn 65. While you may purchase additional Medicaid plans none of the Medicare plans cover the cost of long-term care.
Medicaid is also a federal benefit program; however, it is administered by the individual states. Unlike Medicare, Medicaid does provide coverage to people under the age of 65. While there are no income limits for Medicare, the Medicaid program does have both income and asset limits. Another key difference between Medicare and Medicaid is that the Medicaid program will cover some, if not all, of the costs associated with long-term care. Long-term care coverage is often the sole reason why older Americans find themselves needing to qualify for Medicaid benefits.
The average cost of a year stay in a long-term care facility is about $75,000. The average length of the stay in a long-term care facility is approximately 2 1/2 years. For the average American, having to pay for long-term care out-of-pocket can deplete a lifetime of savings. Moreover, most health insurance plans do not cover long-term care. Unless you have a separate long-term care insurance policy this likely means that you have no insurance coverage in the event you, or your spouse, requires long-term care at some point in the future.
Although the Medicaid program can help with the cost of long-term care, you must qualify first. Asset limits for the Medicaid program can be as low as $2,000 or $3000. This could mean you are forced to spend your life savings before you qualify for Medicaid benefits. The good news is that there are legal strategies that can be incorporated into Medicaid planning that will allow you to save your assets and still qualify for benefits. You cannot simply transfer your assets out of your name and turnaround the next and apply for Medicaid because Medicaid will consider recent transfers when determining your eligibility. This is why creating a Medicaid plan ahead of time is best; however, there are options in an emergency. If you suddenly find that you, or is spouse, needs to qualify for Medicaid and you are concerned about losing your assets it is imperative that you consult with your estate planning attorney immediately to determine what legal options you have.
Stephen A. Mendel, Estate Planning Attorney
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