The increasing cost of nursing home care is one of the great crises facing Americans. Over the past five years alone, the cost of long-term care has increased 24 percent costing $80,000 a year in many cases.
These expenses catch many families off guard. Few give them no more than a passing thought until the need for nursing home care is imminent and arrangements take on crisis planning mode. At current rates, it doesn’t take long for a family to exhaust its financial resources paying for long-term care. This can leave a healthy spouse without adequate funds to live on and destroys any dream of passing on a carefully amassed nest egg to children.
High costs have pushed Medicaid into a position as the primary payer for long-term care. While Medicaid was originally envisioned as a lifeline to help those with extremely limited resources, it is now covering nearly half of all nursing home bills for the elderly who have deplete their finances.
Though many families find themselves unable to pay the high cost of long-term care on their own, they are quickly discovering that qualifying for Medicaid is no simple matter. In fact, it is a process that requires planning and expert advice from a lawyer familiar with elder care issues.
While a knowledgeable attorney can help you work out the best-case scenario for crisis planning to qualify for Medicaid, your best option is always to get your plan laid out and in motion before the need for care is imminent. Because of restrictions explained below as well as others, it is wise to plan ahead.
What you need to know now to manage nursing home expenses later
Become familiar with Medicaid qualification requirements
To be eligible for Medicaid your assets must be depleted down to $2,000 or less and you can have no more than $75 a month in income. To reach this level of need requires a well plan asset protection strategy. Working with your lawyer, you will need to determine which of your assets are exempt and the rules you must abide by in depleting your assets to qualify for Medicaid.
Understand which of your assets are exempt from income consideration
In Colorado, the following assets are exempt from income consideration:
- Equity in your primary residence up to $585,000 (potentially more if a spouse, minor or blind or disable child currently lives there)
- One vehicle
- Personal property such as furniture, clothing, appliances, etc.
- Up to $1,500 in life insurance and $1,500 in burial insurance. Gravesites and markers for the couple and immediate family are exempt, too.
Retirement accounts, while countable as an asset, may be reduced to save taxes and other penalties that will be applied due to early withdrawal.
- A commercial, irrevocable, non-assignable annuitized annuity. Payments from such a source are considered as income during the month when the money is received.
- Promissory notes, which are to be paid out in equal payments and that cannot be canceled upon your death.
Plan ahead to avoid trouble during the 60-month Look Back period
In attempting to qualify for Medicaid, it is vital that you not transfer assets to others during the 60-month period before your applying for coverage (known as the Lock Back period). This provision is one of the main reasons it is important to plan early. If you want your heirs and beneficiaries to receive a substantial portion of your estate, you will need a carefully laid out strategy designed with the help of a knowledgeable lawyer well versed in Colorado law as it relates to elder issues. Resources given during the five year look back window often generate large penalties including the withholding of Medicaid until the value of the resource given has been recouped in nursing home payments.
Work with a Colorado attorney familiar with strategies for wealth protection AND the full ramifications of 2005 Deficit Reduction Act Medicaid eligibility
There used to be a number of effective strategies available to help the elderly in dispersing and protecting their wealth. Many of these unraveled in 2005 with the signing of the Deficit Reduction Act. Today, it is more important than ever that you consult with a knowledgeable attorney to determine your best course of action in preparing for the future and protecting as many of your assets as possible from exposure.
The estate planning lawyers at Robinson & Henry know the laws surrounding Medicaid eligibility and the opportunities still available to older Coloradans. For advice planning for the possibility of nursing home care in the future or help seeing your way through an immediate Medicaid eligibility crisis call 303-688-0944 for assistance. The initial consultation is free.