Ideally, most people should start including Medicaid planning tools and strategies in their estate plan once they reach middle age. Not everyone does though, which can put their assets at risk during their retirement years if they reach a point at which qualifying for Medicaid becomes crucial. If that does come to pass for you, do not despair. While it is certainly best to think ahead and plan for the need to qualify for Medicaid, you may be able to use some last-minute Medicaid planning strategies to protect some of your assets. The Grand Forks Medicaid planning attorneys at German Law | Wealth discuss why it might not be too late for Medicaid planning to help.
Do You Need to Qualify for Medicaid?
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 2021 was over $100,000. If you are a North Dakota resident, however, you can expect to pay considerably more than the national average. For that same year, the average yearly cost for a private room in LTC was more than $150,000 in North Dakota.
The real problem, however, comes when you realize that you may be forced to cover those expenses out of pocket. Like many seniors, you may rely on Medicare to pay for most of your healthcare expenses; however, you won’t be able to turn to Medicare for LTC expenses 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 an LTC facility rely on Medicaid for help paying their LTC bill. For Medicaid to help though, you must first qualify for benefits, and if you did not include Medicaid planning in your estate plan, qualifying for Medicaid may be difficult.
Medicaid Eligibility Guidelines
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. The income limit is tied to the Federal Poverty Level and will change depending on the Medicaid category, your geographic location, and household size. The income limit is not where most seniors encounter a problem though. It is the extremely low asset limit that typically poses a problem for seniors who did not plan accordingly. In most states, an individual applicant cannot own “countable resources” valued at over $2,000. 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. Furthermore, Medicaid’s five-year “look-back” rule prohibits you from transferring your non-exempt assets at the last minute in anticipation of the need to qualify for Medicaid.
Last-Minute Medicaid Planning
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.
Contact a Grand Forks Medicaid Planning Lawyer
Please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding Grand Forks Medicaid planning, contact the North Dakota Medicaid planning lawyers at German Law | Wealth by calling 701-738-0060 to schedule an appointment.
John grew up on a small livestock farm in west central Minnesota. He now lives in Grand Forks with his wife Maggie and their two daughters. In his free time John enjoys reading, taking his family to North Dakota and Minnesota state parks and rooting for all UND and Minnesota professional sports.
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