One of the most popular additions to a well-thought-out estate plan is Medicaid planning. Even if you have made it through most of your life without ever needing to qualify for Medicaid benefits, you should consider the addition of a Medicaid planning component to your estate plan because there is a very good chance you will need those benefits as a senior. Toward that end, a Loveland Medicaid planning attorney at Zimmer Law Office offers important Medicaid planning tips.
- Understand the potential need to qualify for Medicaid. If you are going to consider adding Medicaid planning to your estate plan, you need to know why such an addition is beneficial. The need to qualify for Medicaid benefits as a senior will come because of your need for long-term care (LTC). Although you may rely heavily on Medicare as a senior to cover healthcare costs, Medicare won’t pay for LTC nor will your average health insurance policy unless you purchased a separate LTC policy. For this reason, more than half of all seniors currently in LTC depend on Medicaid to help cover their LTC expenses.
- Protect your assets. The important issue with the need for LTC from an estate planning perspective is the cost of that care. In the State of Ohio, the average monthly cost of LTC in 2022 was over $8,000, and the average length of stay was three years. If you are in your 40s right now, however, it could be another 30 years before you need LTC. Experts estimate that the same month of LTC in 30 years will cost you about $20,000, putting the cost of an average LTC stay in Ohio 30 years from now at close to $750,000. Unless you want to spend your heard-earned assets paying your LTC bill, Medicaid may be your only option for help.
- Learn Medicaid eligibility guidelines. Because it is intended to help low-income recipients, Medicaid uses both an income and an asset threshold that you cannot exceed if you wish to qualify. The asset limit is just $2,000 for an individual in most states, including Ohio. While some primary assets, such as your home or a single vehicle, are exempt, most seniors who have been saving for decades have assets that exceed the limit. Unless you have planned ahead, those assets could be at risk because Medicaid will expect you to use those assets to pay your LTC expenses first (known as the Medicaid “spend-down requirement) and then Medicaid will help.
- Start planning now. Waiting until the last minute to worry about qualifying for Medicaid puts your assets at risk because of the five-year “look-back” rule. The five-year look-back rule allows Medicaid to check for asset transfers made for less than fair market value within the last five years. If any are found, Medicaid may impose a waiting period during which time you will not be eligible for Medicaid benefits. Planning, however, allows you to protect your assets by putting them out of reach. One common Medicaid planning tool is a Medicaid trust. A special type of irrevocable living trust, a Medicaid trust removes valuable assets from your estate and places them out of reach of the Medicaid eligibility guidelines.
- Never assume it’s too late. While it is always best to include Medicaid planning in your estate plan as early on in your life as possible to ensure your eligibility for Medicaid in the future, should you need it, you may still be able to take advantage of some Medicaid planning tools and strategies if you suddenly need to qualify for Medicaid and did not plan ahead. You might, for example, be able to use a common last-minute Medicaid planning strategy that involves converting a non-exempt asset to an exempt asset, thereby protecting that asset from the spend-down rules.
Contact a Loveland Medicaid Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about incorporating Medicaid planning into your estate plan, contact an experienced Loveland Medicaid planning attorney at Zimmer Law Office by calling 513-721-1513 to schedule your appointment today.