Estate planning encompasses much more than simply deciding who will receive your estate assets when you are gone. One additional component of many estate plans, for example, is Medicaid planning. Medicaid planning is an important part of many estate plans, in fact, because it helps you plan for the likelihood that you, and/or a spouse, will need long-term care at some point during your retirement years. By including Medicaid planning in your estate plan you can help ensure that you will meet the North Dakota Medicaid eligibility guidelines if the time comes that you need to do so.
Will You Need Long-Term Care?
Although most of us would prefer not to think about it, the reality is that the longer we live the higher the chance we will one day need long-term care. When you reach retirement age (65), your odds of eventually needing long-term care (LTC) are about 50-50. If you make it to age 85, those odds increase to 75-25. Whether we want to think about it or not, the specter of LTC looms on the horizon for many of us. The key to handling the likely eventuality of LTC is to plan ahead.
How Much Will Long-Term Care Cost You?
Why is it so important to plan ahead for LTC? Because the cost of that care could deplete your retirement nest egg rather quickly. As of 2016, the average cost of a year in LTC in North Dakota is about $130,000. Projections put the average cost of that care in 20 years at about $233,000 a year. Considering the fact that the average length of stay in a long-term care facility is 2.5 years, it becomes easy to see how the cost of that care could wipe out a lifetime of savings in a short amount of time. Moreover, don’t plan on your health insurance or Medicare to cover the costs of LTC. Most health insurance policies do not cover LTC unless you purchased a spate LTC rider at an additional cost. Furthermore, Medicare only covers LTC under very limited circumstances and, even then, only for a short period of time.
Will You Qualify for Medicaid?
The good news in all of this is that Medicaid does cover long-term care expenses. The problem, however, is qualifying for benefits. Medicaid is a federally funded, but state administered, healthcare program for low income individuals, families, disabled and elderly. If you are applying as an “over 65” applicant, you must meet the income and asset requirements to be eligible for benefits. For an individual applicant, the asset limit is just $3,000 while a married couple may have $6000 in “countable resources.” Certain assets are exempt, such as your residence; however, many seniors have non-exempt assets that are worth considerably more than the $3000 limit. When that is the case, you must endure a “waiting period” during which time you are expected to cover your LTC expenses yourself by relying on those assets. In essence, you will lose your nest egg if your assets exceed the program limit when you apply. Finally, transferring those assets when you realize you need to qualify for Medicaid won’t work because Medicaid uses a five-year look-back period.
How Can You Ensure Your North Dakota Medicaid Eligibility?
If you don’t want to put your assets at risk but still want to ensure you will be eligible for Medicaid when the time comes, the key is to include Medicaid planning in your overall estate plan now, long before you actually need benefits. Medicaid planning often focuses on minimizing the value of your non-exempt assets, or “countable resources,” so that when the time comes for you to apply for Medicaid your assets do not exceed the program limits. One way to do that is to create a Medicaid trust into which your valuable non-exempt assets are transferred. Once the assets are transferred into a trust they become trust property, meaning they are no longer part of your estate for Medicaid eligibility purposes. Of course, only your North Dakota estate planning attorney can tell you if a Medicaid trust is right for your plan.
If you have additional questions about estate planning strategies for farmers in the State of North Dakota contact the experienced estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.