The life expectancy of the average American has almost doubled over the last century. While living longer is certainly something to look forward to, it also comes at a cost for many people. The longer you live, the greater your odds are of needing long-term care. The cost of that care could deplete your retirement nest egg in a relatively short period of time. To prevent that from happening, Medicaid Planning strategies and tools should be incorporated into your overall estate plan long before you reach retirement age.
The Medicaid Planning attorneys at Levine, Furman & Rubin, LLC can help you navigate the often complex laws governing long-term care costs and Medicaid eligibility to ensure you’re your assets are protected if the time comes that you need to qualify for Medicaid. Contact us today by calling (732) 238-6000 or by filling out our online contact form so we can get started protecting you and your family.
What You Need to Know about Long-Term Care
You might live to be 100 without ever spending a day in a long-term care (LTC) facility; however, your odds of needing LTC increase dramatically when you reach retirement age. At age 65, you stand a 50 percent chance of needing LTC at some point prior to the end of your life. If you are still here at age 85, your odds of needing LTC will have increased to a 75 percent chance. If you do end up in LTC, the cost of that care may surprise you. As of 2016, the average cost of LTC nationwide was $80,000 per year. In New Jersey, however, that same care averaged $130,000 a year.
While you may count on Medicare to cover most of your health care expenses during your retirement years, Medicare will not cover LTC under most circumstances. Unless you purchased a separate long-term care insurance policy, you will likely be forced to pay out of pocket for your LTC expenses absent help from another source. For over half of all seniors in LTC, that other source is Medicaid.
Qualifying for Medicaid – The “Countable Resources” Predicament
Fortunately, the Medicaid program does help with LTC expenses. The problem for many seniors is found in the eligibility guidelines. Specifically, the “countable resources” limit is so low ($2,000) that many applicants who failed to plan ahead are not eligible because their resources exceed the limit. When that is the case, Medicaid imposes a waiting period during which time the applicant must “spend-down” resources. In effect, this means you must sell your assets and rely on the proceeds to pay your LTC expenses during the waiting period. The way to avoid putting your hard-earned assets at risk like this is by including Medicaid Planning in your comprehensive estate plan.
What Is Medicaid Planning?
Simply transferring assets out of your name when you realize you need to qualify for Medicaid will not work because the Medicaid guidelines include a five-year “look-back” period. The look-back rule allows Medicaid to review an applicant’s finances for the five-year period prior to application for asset transfers made for less than fair market value. If any are identified, they will likely be disallowed and the value of the asset imputed back into the applicant’s estate for eligibility determination purposes. Medicaid Planning uses legal strategies and tools to reduce your countable resources now so that if you need to qualify for Medicaid in the future, doing so will not put your assets at risk.
At Levine, Furman & Rubin, LLC, we are committed to helping you protect your hard-earned assets by incorporating a Medicaid Planning component into your overall estate plan. Contact the New Jersey team today by calling (732) 238-6000 or by filling out our online contact form.