Media coverage about the high cost of long-term care has prompted many people to think about how they would pay for care if they or a loved one needed it. Unfortunately, most individuals wait too long to plan and while some last-minute planning can be done, waiting too long will likely cause them to miss out on opportunities to preserve their assets and utilize government benefits. Often, they delay their planning because of a misunderstanding about how Medicaid works. An experienced attorney is the best person to explain all your options, but as a start, it’s helpful to learn why some common Medicaid myths are false.
Myth # 1 – I do not need to do any long-term care planning ahead of time. I can wait until I need a nursing home.
According to the US Department of Health & Human Services, 70% of Americans who reach the age of 65 will need some form of long-term care in their lifetime for an average of three years. Therefore, it’s wise to assume that you will need such care yourself. Medicaid planning is a process whereby you utilize various legal tactics to allow you to qualify for Medicaid instead of using your own funds to pay for your care while protecting your income and assets. These techniques are most effective if implemented ahead of time.
The advantage of engaging in Medicaid planning well in advance of needing care is that it provides the most options and strategies to protect your assets. There are complex rules and regulations that govern Medicaid eligibility for long-term care, including a five-year lookback period for certain types of asset transfers. This means that Medicaid will look back five years from the time you apply for benefits seeking evidence of asset transfers made for less than fair market value. If there are any, you are penalized monthly for every month that you could have paid for the long-term care absent the transfer of assets.
As a result of these rules, the best time to start planning is when you are still healthy and the likely need for long-term care is far down the road. You should start early – even as early as your 30s – to ensure you have plenty of time to execute your optimal strategy to preserve assets for your family.
Myth # 2 – Medicare, my disability insurance, and/or my health insurance will pay for my long-term care needs.
Many people incorrectly believe that Medicare or their current health or disability insurance will cover any long-term care costs they have and therefore, no Medicaid planning is needed. Unfortunately, this is not correct.
While there are a few limited exceptions, Medicare generally does not cover long-term care. For example, Medicare will pay for skilled care in a nursing home for short periods, typically, up to a maximum of 100 days. However, usually, you must be sent to a nursing home from a hospital to recuperate following a hospital stay for a related condition. Once your care needs stabilize and it is determined that you instead need personal or custodial care, Medicare will stop paying for nursing home costs. Medicare will also only pay for care in your home under very limited circumstances.
Unfortunately, private health and disability insurance policies do not pay for most long-term care costs. Only specific long-term care insurance, which is purchased separately from health or disability insurance, covers long-term care costs in a facility or at home.
Myth # 3 – I need to get rid of everything in order to qualify for Medicaid.
Most people think that they have to give away all of their assets to qualify for Medicaid. This is simply not true. Generally, Medicaid exempts several types of assets and income allowing you to retain them. Subject to some specific requirements, this generally includes your home. For example, if you or another qualifying person lives in the home and it is worth less than a certain value based on your location, it is deemed an exempt asset for eligibility purposes. There are also protections for spouses. For instance, if one spouse goes into the nursing home, the other spouse is permitted to keep a higher level of assets than an unmarried person.
In addition, as mentioned previously, proper Medicaid planning can allow you to shelter and preserve assets and income and still qualify for Medicaid.
Importantly, while advance planning is best, there are still techniques that can be utilized at the last minute if a nursing home or other long-term care is needed immediately. Therefore, consulting an attorney is essential.
Medicaid rules are complex and an experienced lawyer can potentially save you significant money. Our attorneys have helped many families preserve their assets and achieve peace of mind and we can help you evaluate your choices. Complete the inquiry form here to set up your consultation.