We typically hear many of the same questions from people that come in for their first Medicaid planning consultation. We like to share important information on this blog, so we will take a look at these questions in this post since they are on the minds of most people that are interested in the subject.
Why would Medicaid be important if I will be eligible for Medicare at the age of 65?
This is the most commonly asked question that we hear when we are discussing the matter with new clients. It is true that most senior citizens will qualify for Medicare when they reach the age of 65. If you have worked for at least 10 years, or if your spouse has done this, you will be eligible under current existing laws.
Medicare will provide a solid health care insurance foundation, but it does not pay for everything in full. There are deductibles, co-payments, and monthly premiums, so you should certainly look into the facts and budget for these out-of-pocket costs when you are planning for retirement.
There is one health care related expense that Medicare will not cover at all. If you were to spend time in a nursing home or a long-term care facility, Medicare would not pay one red cent.
However, Medicaid will pay for long-term care if you can qualify. This is a government health insurance program that is intended for people with a significant level of financial need. Because it is a need-based program, there is an asset limit of just $2000.
Most people never spend time in assisted living facilities, right?
If you have been reasonably healthy and independent throughout your life, you may assume that you will always be able to handle all of your own needs without assistance. However, the facts tell a different tale.
The United States Department of Health and Human Services maintains a very useful website called LongTermCare.gov. There are many eye-opening facts on this website, so we urge you to visit the site to gain an understanding of the issue.
One tidbit of information that is very relevant to this discussion is the fact that 70 percent of people that are turning 65 on any given day will someday require help with their activities of daily living. About 35 percent of them will reside in nursing homes.
Is it affordable to pay for nursing home care out of your own pocket?
Nursing home costs can be described as exorbitant, and the numbers have been rising year-by-year. There is a company called Genworth Financial that sells financial products that are valuable to senior citizens. They conduct a great deal of in-depth research to keep a finger on the pulse of the current state of long-term costs.
These reports look at the median cost of nursing home care around the country as a whole. Plus, they also drill down to each individual state, and larger areas within each state.
During the 2019 calendar year, the median cost for a month in a private room in a Cincinnati nursing home area was $9779. If you do the math, this factors out to an annual figure of $117,348. Settling for a semi-private room is an option, but the savings would be relatively minimal. The annual charge for a semi-private room in our area last year was just over $96,500.
How can I ever qualify for Medicaid to pay for long-term care if I have over $2000 in resources?
The first thing you have to understand about this is that everything that you own is not considered to be countable. Your home is not a countable asset, and you are allowed to maintain ownership of one vehicle that is used as a primary source of transportation. Household goods, personal effects, wedding rings, engagement rings, and heirloom jewelry are not counted either.
When it comes to assets that are counted, you could give them away to your loved ones before you pass away or convey them into an irrevocable trust. This must be done with precise timing, because you are penalized and your eligibility is delayed if you give away assets within five years of the submission of your application for Medicaid coverage.
Attend a Free Seminar!
Our attorneys are holding a number of free seminars over the coming months. We urge you to attend the session that fits into your schedule, and you can click the following link to get all the details: Free Cincinnati Estate Planning Seminars.