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As Americans age, we are also living longer, which means more of us will require long-term care in the future. It is estimated that seven out of ten Americans will need long-term care during their lives.
Long-term care can include care in one’s home, an assisting living facility, or a nursing home. Some seniors are able to rely on relatives or friends for some care. For those who don’t have that option, health-care professionals can provide the long-term care they need. However, the cost of long-term care is increasing annually. You can estimate the cost of long-term care in your area by using Genworth’s Cost of Care Survey.
Paying for Long-Term Care
Paying for long-term care can quickly drain a person’s savings. Many seniors end up blowing through the assets and retirement savings they have spent their lives accruing before they are able to qualify for government assistance. One form of government assistance that is available to all eligible Americans is Medicaid.
Medicaid is a federal and state program that helps cover the costs of many medical needs for those who have very limited financial resources. Because the financial limit of assets and income is so low, many people are not eligible. To become eligible, you must have less than the maximum allowable assets and income for the five years prior to applying for Medicaid. This five-year period is referred to as the five-year lookback period.
Medicaid Gifting Penalty
People often mistakenly think they can simply give away their assets then get accepted for Medicaid. This is not how it works. The Medicaid office will impose a gifting penalty based on the value of gifts given during the five years leading up to the application for Medicaid coverage. The length of the penalty is calculated by dividing the total amount given away by the average monthly cost of nursing home care in the state or locality where the applicant lives. The number of months that works out to is the penalty period the applicant must wait before they can start receiving Medicaid benefits. If, for example, a person gives away $100,000 during the five years leading up to their application for Medicaid and the average cost of nursing home care in their state is $10,000 per month, then the penalty period would be 10 months.
There are exceptions to the gifting rule. Under certain circumstances, a person can make gifts to spouses and siblings, children with disabilities, and children who are caregivers and who live at home for a certain amount of time with the person needing care. The Medicaid rules are complicated and the consequences for mistakes can be very costly.
There are options to protect assets and still qualify for Medicaid benefits, but these options must be weighed with great care. The earlier you start planning the better chance you have of protecting your hard-earned assets. Consult with attorneys who, like us, are qualified by experience and expertise in Medicaid law. We can help you qualify and apply for Medicaid while preserving your assets for the next generation.
Our law firm is dedicated to keeping you informed of issues that affect seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home care, assisted living care, or nursing home care.