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The Importance of Medicaid Planning

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A well thought out and successful estate plan should do much more than simply determine how your estate assets are distributed after you are gone. One additional component that should be included in your estate plan is a long-term care planning component. To help you understand why, a Waldorf Medicaid planning attorney at Sinclair Prosser Gasior offers five reasons why Medicaid planning is important.

  1. Your odds of needing LTC are high. To understand why you need to consider adding a long-term care planning component, you need to know why such an addition is beneficial. The need to qualify for Medicaid benefits as a senior will come as a result of your need for long-term care (LTC). The need for long-term care is more likely than you may realize. 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.
  2. LTC costs are expensive. Across the nation, the average cost of a year in LTC for 2019 was over $100,000. Maryland residents pay, on average, more than the national average. For 2019, the average cost of a year in LTC for Maryland residents was around $120,000. With an average length of stay of almost three years, you are looking at a LTC bill of over $350,000 for an average stay.
  3. You are likely facing out of pocket payments. Although you may rely heavily on Medicare as a senior to cover healthcare costs, Medicare won’t pay for LTC and neither 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. Medicaid will cover LTC expenses; however, you must first qualify for Medicaid benefits.
  4. Qualifying for Medicaid can be complicated. Qualifying for Medicaid benefits requires an applicant to meet Medicaid’s eligibility requirements for seniors. That, in turn, means you have to meet the income and asset tests that impose very low limits on the amount of income you can have and the value of non-exempt assets you may own. The income limit is tied to the Federal Poverty Level and will change depending on which Medicaid category you apply under, your geographic location, and household size. The income limit, however, is not where most seniors encounter a problem. 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 $2,000 and still qualify for Medicaid. 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.
  5. Planning ahead is necessary. 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 ahead, however, allows you to protect your assets by putting them out of reach. It is for this reason that long-term care planning should be included in your overall estate plan.

Contact a Waldorf Medicaid Planning Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about Medicaid planning, contact an experienced Waldorf Medicaid planning attorney at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.

Jon J. Gasior, Estate Planning Attorney
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About Jon J. Gasior, Estate Planning Attorney

His personal experience with family and the problems that resulted from their failure to create an estate plan resulted in his desire to learn more about this area of the law. From his work in the Elder Law Clinic, he further realized the need to plan not only for death, but also for incapacity during their lifetime.