Medicaid planning is important for many senior citizens because of the high costs that go along with long-term care. The stark reality is that most people simply cannot pay these expenses comfortably out-of-pocket. This is because we are talking about an average annual expense exceeding $136,000 for nursing home care.
One of the misconceptions that is harbored by far to many people is the idea that Medicare will pay for everything once you become eligible for coverage. People who pay into the Medicare program sufficiently are eligible for enrollment at the age of 65 under currently existing laws.
Medicare is important, and it is very helpful, but it doesn’t cover everything in full, and it doesn’t cover long-term care at all. That’s right, you’re going to have to look elsewhere if you need assistance with your long-term care expenses.
That “elsewhere” is Medicaid for a great many people. The majority of elders in nursing homes are indeed enrolled in the Medicaid program. Many of these people were not poor throughout their lives, but long-term care expenses are so extreme they really have no other choice.
There are upper asset limits that you must stay within to qualify for Medicaid. Therefore, a common practice that people engage in is the Medicaid “spend down.” It’s kind of self-explanatory: you spend or give away your assets in advance of applying for Medicaid so that you can get within the upper asset limit.
This involves careful advance planning if you want to do it effectively. The upper asset limit is only part of the equation. You also want to consider Medicaid recovery efforts, and you should carefully evaluate the well-being of your spouse if you are entering a long-term care facility and your spouse is still healthy enough to live on his or her own. There are complex rules governing what is allowable for the healthy or community spouse.
When is it too late to start planning ahead with Medicaid eligibility in mind? In a way it is never too late. Even if you should have started earlier, you can improve your situation by working with an elder law attorney to take the right steps.
However, to be optimally prepared you should get started at least five years before you have any intentions of applying for Medicaid eligibility. This is because of the fact that the Medicaid program examines your financial transactions going back five years to make sure that you have not given away anything in an effort to spend down.
If Medicaid finds evidence of a spend down within five years of your application you will not be deemed immediately eligible for the program. You will be penalized, and this penalty will delay your eligibility. It is important to speak with an elder law attorney, and find out what you need to do to protect your loved ones.