Within your comprehensive estate plan, you may wish to include a Medicaid planning component. To do that, you should start by learning more about the Medicaid eligibility requirements, including how the Medicaid “look-back” rule could put your assets at risk during your retirement years. To help you understand why Medicaid planning is important, the Loveland area Medicaid planning attorneys at Zimmer Law Firm explain the Ohio Medicaid look-back rule.
I Have Never Needed Medicaid. Why Do I Need to Worry about Medicaid Rules?
Why would you suddenly need to qualify for Medicaid as a senior? The answer is directly related to the likelihood that you will need long-term care (LTC) during your retirement years. When you reach retirement age, around age 65, you will already stand more than a 50 percent chance of needing some type of LTC services before the end of your life. Every year, those odds increase, and your spouse shares the same odds if you are married. If either of you ends up in LTC, the cost of that care will be steep. The nationwide average for a year in LTC for 2021 was over $100,000. Ohio residents paid, on average, just under the national average for LTC that same year.
Paying for Long-Term Care
As a retiree, you may depend on Medicare to cover most of your health care expenses. Medicare, however, will not cover LTC expenses nor will most private health insurance plans. In fact, unless you purchased a separate long-term care insurance policy at an additional cost, you will probably be faced with covering your LTC expenses out of pocket. Not surprisingly, over half of all seniors in LTC turn to Medicaid, because Medicaid does cover LTC expenses. First, however, you will need to qualify for Medicaid.
How the Look-Back Rule Impacts Qualifying for Medicaid in Ohio
Because Medicaid is a “needs-based” program, Medicaid uses both an income and a “countable resources” limit when determining eligibility. Although some assets are exempt from consideration, it is still easy for a retiree to have non-exempt assets that exceed the countable resources limit. If that is the case, your application will be denied. To prevent applicants from transferring assets out of their name in anticipation of applying for benefits, Medicaid imposed the “look-back” period. The look-back period in almost all states, including Ohio, is 60 months. The look-back rule allows Medicaid to review your finances for the 60-month period preceding your application for asset transfers made for less than fair market value. If any transfers are flagged, it may trigger a penalty period during which you will be responsible for covering your LTC expenses.
The length of the penalty period is calculated using the value of the assets you transferred and the average monthly cost of LTC in your area. By way of illustration, imagine that you gifted non-exempt assets valued at $150,000 to someone during the look-back period. The average monthly cost for a private room in LTC in Ohio was $8,213 in 2021. The length of the penalty period imposed by Medicaid is determined by dividing your excess assets by the average monthly cost of LTC. Using the above figures, you would incur a penalty period of 18 months ($150,000/$8,213 = 18.27). During the waiting period, you would be forced to use your own assets to pay for your LTC expenses. Incorporating Medicaid planning into your estate plan early on is the best way to protect your assets from loss because of the Medicaid look-back rule and ensure that you will qualify for Medicaid if you need it in the future.
Contact a Loveland Area Medicaid Planning Attorney
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about Medicaid planning, contact an experienced Loveland area Medicaid planning attorney at Zimmer Law Firm by calling 513-721-1513 to schedule your appointment today.