Like many people, you may have made it all the way to your “Golden Years” without ever needing to turn to Medicaid for help with healthcare related expenses only to find that qualifying for Medicaid as a senior is crucial because of the high cost of long-term care. If you did not plan ahead, however, you may find that the value of your assets actually prevents you from qualifying. At that point, can’t you simply transfer those excess assets to an adult child in order to meet the eligibility requirements? As a Grand Forks Medicaid planning attorney at German Law explains, transferring surplus assets to an adult child in order to qualify for Medicaid simply won’t work.
Will You Need to Qualify for Medicaid?
While there is no way to know if long-term care (LTC) is in your future, we do know that the odds of needing LTC increase with each passing year. When you enter your retirement years, around age 65, you will already face a 50 percent chance of needing LTC before the end of your life. If you are fortunate enough to still be here at age 85, your chances of needing LTC will have increased to 75 percent. If you do end up needing LTC you can expect to pay a hefty price for that care.
Nationwide, the average cost of a room in LTC was about $100,000 per year in 2018. Unfortunately, North Dakota residents paid, on average, considerably more than the national average at around $140,000 per year. If forced to pay out of pocket it is easy to see how the cost of LTC could deplete your retirement nest egg in short order – and you may very well have to pay out of pocket. Although you may come to rely on Medicare to pay for your healthcare expenses as a senior, Medicare will not cover LTC expenses nor will most private health insurance policies. For many seniors, this leaves paying out of pocket or qualifying for Medicaid as the only options.
Will You Qualify for Medicaid?
To qualify for Medicaid benefits, you must meet the income and asset tests along with other eligibility requirements. 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. 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 while a married couple cannot own more than $3,000worth of countable resources. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again. In reality, this means you will be expected to rely on those assets to pay your LTC expenses until the assets have been depleted.
Can’t I Just Transfer the Assets to My Adult Child?
If you need to qualify for Medicaid, and you know your non-exempt assets exceed the limit, transferring those excess assets to an adult child may sun like the perfect solution – but it is not the perfect solution. Medicaid will scrutinize your financial transactions for the 60 month period prior to the date of your application. Any asset transfers completed during that time period for less than fair market value could trigger a penalty in the form of a waiting period. The length of the waiting period is calculated by dividing the value of your excess assets by the average monthly cost of LTC in your area. During the waiting period you would be responsible for paying your LTC costs – precisely what you were trying to avoid.
Ultimately, the best way to ensure that you qualify for Medicaid if you need it in the future is to incorporate Medicaid planning strategies
Contact a Grand Forks Medicaid Planning Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about Medicaid eligibility or about incorporating Medicaid planning into your estate plan, contact a Grand Forks Medicaid planning attorney at German Law by calling 701-738-0060 to schedule an appointment.