Many people are unpleasantly surprised when they learn all the facts about long-term care and the expenses that go along with it. As we all know, Medicare is a government health insurance program that is intended to assist senior citizens.
If you have paid FICA or self-employment taxes for at least 10 years, you will qualify when you reach the age of 65. Even if you have not done this yourself, if you are married and your spouse has met the requirement, you will be Medicare eligible.
The United States Department of Health and Human Services maintains a very informative website called longtermcare.gov. According to the site, seven out of every 10 people that are reaching the age of Medicare eligibility will eventually need help of their activities of daily living. A significant percentage of them will spend their final days in nursing homes.
Since Medicare exists to provide a health care safety net for senior citizens, and most people will need living assistance eventually, it would be logical to assume that the program will pay for a stay in a nursing home. It is a head scratcher for a lot of us, but the fact is, Medicare will not pay for the custodial care that you would receive in a nursing home or assisted living facility.
The lack of coverage is a very big deal from a financial perspective, because nursing homes are extremely expensive. You can expect to pay somewhere in the vicinity of $110,000 for a year in a private room in a nursing home in the Cincinnati area.
Income-Only Medicaid Trusts
Now that we have set the stage appropriately, we can endeavor to answer the question that serves as the title of this blog post. Medicaid is a different government administered health insurance program that does pay for long-term care. Since it is intended for people with a significant level of financial need, there is a low asset limit of just $2000 in Ohio.
Some individuals think that assets that have been conveyed into any type of trust would not be counted if you were to apply for Medicaid to pay for a stay in a nursing home. In fact, this is an inaccurate perception. If you were to use a revocable living trust as the centerpiece of your estate plan, the assets in the trust would be counted.
This is because you retain incidents of ownership when you establish a revocable living trust. You can act as the trustee and the beneficiary while you are living, so you would maintain complete control. Plus, as the name of the device would indicate, you could revoke the trust entirely and take back direct personal possession of the assets in time.
The assets would be counted by Medicaid because you retain this level of control. However, if you want to establish a trust with Medicaid eligibility in mind, you could go in a different direction.
In order for the assets to be out of your name for Medicaid eligibility purposes, you have to convey them into an irrevocable trust. You would surrender incidents of ownership if you establish this type of trust, and you would not be able to change the terms or touch the principal.
As a result, the assets would not be counted if and when you apply for Medicaid to pay for long-term care. Another advantage is the fact that you can continue to receive income that is earned by assets that have been sign over to the trust until and unless you are enrolled in the Medicaid program.
Schedule a Consultation Today!
If you would like to obtain more detailed information about nursing home asset protection strategies, we would be more than glad to assist you. We can gain understanding of your situation and your estate planning goals and explain your options to you. Ultimately, we can help you execute a plan that preserves your legacy for the benefit of the people that you love the most.
You can send us a message through our contact page to request a consultation appointment, and we can be reached by phone at 513.721.1513.