Nursing home care has been on the rise for some time now, and the average costs for that care now exceed $200 a day in many places around the country – with monthly costs ranging from $6,000 to more than $10,000. Unfortunately, most seniors cannot afford those kinds of expenses, and many have little choice other than to rely upon government programs like Medicaid to help cover the cost. The problem is that Medicaid’s eligibility standards are so strict that seniors can sometimes struggle to meet the asset limits set by law. Many end up resorting to the use of emergency Medicaid strategies to comply with the legal eligibility requirements. With a little planning, though, you can usually avoid those extreme measures.
Why is it So Hard to Qualify for Benefits?
On the surface, it might seem as though seniors should have little trouble qualifying for the benefits they need. After all, if they lack the money to pay for care, then it would just seem logical that benefits would be available to them. Unfortunately, things are much more complex than that. The high cost of care and low asset threshold can make it difficult for many average seniors to qualify without taking some type of measure to bring the value of their estates into line with those limits.
For many seniors, the situation is all too common. They enter retirement, are enjoying their golden years, and suddenly face declining health. When a senior is then told that he or she needs nursing home placement, that small nest egg that was saved up during a lifetime of work suddenly looks even smaller when measured against the costs of long-term care. What happens next can ultimately determine whether a senior is forced to lose all their wealth to qualify for nursing home care or manages to save some portion of it to provide for their loved ones and pass on to their heirs.
For example, say that a senior suddenly needs nursing home care. He or she and their family explore the options and discover that care will cost about $7,000 a month. They look at their retirement savings and note that they have about $70,000 left in their account. Under the best of circumstances, they can expect that they can manage to pay for about a year of care, if they factor in their anticipated Social Security income. At the end of that year, though, they’ll be essentially destitute and reliant on the state for almost all their needs.
At that point, they have several options available to them. They can either choose to move forward and begin to pay for care themselves, knowing that they can apply for Medicaid when their money runs out. They can turn to family and friends to help them cover those costs, and perhaps salvage some portion of their estate – if their stay doesn’t last too long. Or they can look at emergency Medicaid strategies designed to help them qualify for Medicaid sooner by reducing the size of their estate to meet those asset limits.
What are Emergency Medicaid Strategies?
Emergency Medicaid strategies include all those techniques that individuals can use to rapidly reduce the size of an estate without incurring Medicaid eligibility penalties. Those penalties typically apply when seniors transfer assets to loved ones within the five-year period prior to their application for benefits. These strategies avoid such transfers and typically rely on other techniques like spend-down efforts or the purchase of a Medicaid qualifying annuity. When effective, they can sometimes even preserve some assets from nursing home costs.
The spend-down technique involves the applicant spending money on allowable expenditures that won’t trigger the penalty rules. For example, he may be able to upgrade his home, buy his spouse a new car, or even purchase a prepaid funeral plan and burial plot. If he chooses an annuity, he may be able to save a portion of his wealth while directing the remainder to his care. Obviously, neither of these options are optimal, but they are often the best that seniors can do when they’ve failed to properly plan for Medicaid needs earlier in life.
How Can You Avoid those Options?
The good news is that you can avoid emergency Medicaid strategies with proper Medicaid planning. This requires some foresight, since you need to have your plan in place at least five years before you apply for Medicaid, but it’s well worth the effort and cost. With the right strategy, some seniors can shield much of their wealth from nursing home costs while securing Medicaid eligibility long before they need those benefits. Planning typically involves the use of gifting strategies and asset protection tools like irrevocable trusts. The goal is to have as few assets in your name as possible when you eventually apply for government benefits.
When Should You Start Planning?
As noted, your planning should begin no fewer than five years before you even think about applying for the Medicaid program. Like other types of planning, however, you’re always better off starting earlier rather than later. Fortunately, the types of strategies used to protect wealth from nursing home costs can also provide the asset protection you need to shelter assets from creditors, litigants, bankruptcy, and more. In other words, this is asset protection that can benefit you even if you assume that you’re so healthy that nursing home care will never be an issue. The right attorney can help to ensure that your plan provides benefits that you can enjoy no matter what the future holds.
You’re Not Alone
One thing that you must remember, however, is that these are not issues that you should address on your own. You should always rely on an experienced Medicaid planning attorney to help you with any long-term care planning needs. At the Potter Law Firm, our attorneys can help you to understand your best options so that you can avoid being forced to deal with emergency Medicaid strategies. To learn how you can better protect your wealth and ensure that you secure the Medicaid benefits that you need, contact us online or call us today at (704) 944-3245 (Charlotte, NC), (606) 324-5516 (Ashland, KY), or (859) 372-6655 (Florence, KY).
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