Medicaid planning should be included in your estate plan long before you reach retirement age; however, that does not always happen. The absence of Medicaid planning can put retirement assets at risk if you reach a point at which qualifying for Medicaid becomes necessary. The good news is that you may still be able to benefit from last-minute Medicaid planning strategies to protect some of your assets. The Annapolis Medicaid planning attorneys at Sinclair Prosser Gasior explain how last-minute Medicaid planning may be able to help you.
Why Would I Need to Qualify for Medicaid as a Senior?
If you find yourself in need of the type of care that can only be provided by a long-term care facility, you are hardly alone. At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime. As you have undoubtedly discovered, the cost of that care is not cheap. Nationwide, the average cost of a year in LTC for 2020 was over $100,000. If you are a Maryland resident, however, you can expect to pay more than the national average. For that same year, the average yearly cost for a private room in LTC was $127,750 in Maryland.
Moreover, you may be forced to cover those expenses out of pocket because Medicare won’t cover them. Neither will most private health insurance policies unless you purchased a separate long-term care policy. Not surprisingly, over half of all seniors currently in a LTC facility rely on Medicaid for help paying their bill. For Medicaid to help though, you must first qualify for benefits, and if you did not include Medicaid planning in your estate plan ahead of time, qualifying for Medicaid may be difficult.
Will You Qualify for Medicaid?
To qualify for Medicaid benefits, you will need to meet Medicaid’s eligibility requirements for seniors, meaning you must meet the income and asset tests. It is the extremely low asset limit that typically poses a problem for seniors who did not plan ahead. In most states, an individual applicant cannot own “countable resources” valued at over $2,500. A married couple faces an asset limit of just $3,000. Medicaid does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone. You must also contend with the five-year “look-back” rule prohibiting many last-minute asset transfers.
How Can Last-Minute Medicaid Planning Help?
While you may not be able to protect all your non-exempt assets through the use of last-minute Medicaid planning strategies, you may be able to protect some. The key is to consult with an experienced Medicaid planning attorney as soon as you realize you need to qualify for Medicaid. The tools and strategies implemented in your situation will depend on your unique circumstances; however, one goal will be to legally convert as many non-exempt assets as possible into exempt assets. For instance, because you’re the equity in your home is an exempt asset (up to a limit), you might be able to take your savings and pay off your mortgage, thereby converting the non-exempt savings funds into exempt equity.
- Why Do Heirs Prefer Trusts? - August 26, 2025
- What Happens If You Don’t Have a Power of Attorney? - July 22, 2025
- Stretching Your IRA with a Charitable Trust: A Strategy to be Used Post-SECURE Act - June 25, 2025
