As you get older, you naturally start to take the future more seriously. Retirement planning is important, and you should be well aware of all the expenses that you may face when you reach your senior years.
A very significant percentage of senior citizens will eventually need help with their day-to-day needs. The United States Department of Health and Human Services states that 70 percent of people reaching the age of 65 will need long-term care at some point in time.
Most people will qualify for Medicare coverage when they become 65 years of age. However, Medicare will not pay for long-term care.
Medicaid is a government health insurance program that will pay for long-term care. This program is theoretically intended for people with financial need. If you have a reasonable store of assets in your own name, you would not qualify for Medicaid coverage.
Because long-term care is very expensive, the majority of seniors cannot comfortably pay out-of-pocket. As a result, most people who are residing in nursing homes are enrolled in the Medicaid program.
Giving Away Assets
You may absorb all of the above information and come away with a logical conclusion. If you ever need long-term care, you could simply give your assets to your children or other family members of your choice. They would in essence be receiving their inheritances in advance.
Unfortunately, things are not this easy. The powers-that-be do not want you to be able to take this approach.
There is a five-year Medicaid look-back period. If you want to give away assets before you apply for Medicaid, you must complete these transfers at least five years before you apply for coverage.
The program evaluators will look at your financial dealings going back 60 months. If they find that you have given away assets within the 60 month window, you will be penalized, and your eligibility will be delayed.
The period of ineligibility will be tied to the amount of the transfers. To provide an example, according to the state of Pennsylvania, the average cost for a month in a nursing home is right around $8766. This is just over $105,000 per year.
Let’s say that you give away $210,000 within the five-year look-back period. Under these circumstances, your eligibility would be delayed by two years, because you gave away enough to pay for two years of nursing home care.
Because of the five-year look-back, you have to make sure that you look over the horizon and spend down your assets at the ideal time.
Free Medicaid Planning Consultation
Medicaid planning is important to a very significant percentage of senior citizens. If you would like to discuss the matter with a licensed elder law attorney, we can help.
Our firm offers free consultations, and you can send us a message through this link to request an appointment: Bucks County PA Medicaid Planning.
Marianne Flood, Estate Planning Attorney
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