According to government statistics, a person turning 65 today has a nearly 70% chance of needing long-term care in their remaining years. Women require care for an average of 3.7 years while men, who have a shorter life expectancy, need an average of 2.2 years. In 2020, the annual average cost of long-term care in the US was between $19,240 and $105,850 depending on the services needed. This means that no matter how you cut it long-term care costs can take a big bite out of your retirement saving unless you have a robust plan to manage the expense. For most adults outside of the extremely wealthy, Medicaid is the answer. However, those with more than minimal assets only qualify for coverage with careful planning which is why it is important to start early.
What is Medicaid?
Medicaid is a federal and state health insurance program that provides coverage to US Americans of all ages and from all walks of life. The program was originally conceived as a safety net for low-income families and individuals but has since grown into an important resource for anyone concerned about their ability to afford the sky-high costs of long-term care (among other uses). In April 2021 82.3 million people nationwide were enrolled in Medicaid.
Who Qualifies for Medicaid?
Individual states operate their own Medicaid programs according to federal guidelines. This means that Medicaid eligibility criteria vary but certain general characteristics remain constant. Qualified applicants must meet income and asset limitations set by their state and for some benefits, a nursing facility level of care (NFLOC) is required.
Middle-income families and individuals whose assets or income exceed the minimums set by their state’s Medicaid program can qualify through careful financial planning. However, it is crucial that an experienced elder law attorney be consulted in this process as legislation concerning Medicaid eligibility changes frequently.
Common Mistakes When Applying for Medicaid
Among the most frequent mistakes people make when applying for Medicaid is overlooking the look-back period. This period is a limitation that Medicaid imposes to prevent people from giving away assets or selling them under fair market value to meet the program’s asset restrictions. In 49 states and D.C., the period consists of 60 months looking backward from your date of application; in California, the look-back period is 30 months; in New York, it is 60 months for nursing home Medicaid and will soon be 30 months for Community Medicaid. Over this period, Medicaid will review your asset transfers and sales and may impose penalties should any violate their eligibility criteria.
Overlooking the look-back period is not the only common mistake made when applying for Medicaid. Others include applying too early or too late, failing to file power of attorney documents, and overlooking spousal protections. An experienced elder law attorney can ensure that you understand the risks associated with each of these errors and help you steer clear of committing them.
To learn more about Medicaid planning and long-term care protection, do not hesitate to reach out to the Polaris Law Group either by using the contact form on our website.