In addition to the out-of-pocket expenses that you have to pay for Medicare-covered health care treatments and visits, there is one void in the coverage that is a very big deal. If you require living assistance as a senior, Medicare will not help with the expenses. This is the most pressing elder law issue that we have in the United States.
Many people do not think that this makes a lot of sense. After all, Medicare exists to help satisfy the health insurance needs of seniors, and most seniors will need long-term care.
Whether it is fair or not, the lack of coverage is a fact of life. Medicaid does pay for long-term care, and this is why you should gain an understanding of the program when you are looking ahead toward the future.
How Likely Is It?
You may question the statement that we made about “most” senior citizens requiring living assistance eventually. This statistic is coming from the United States Department of Health and Human Services.
They have found that seven out of every 10 people reaching the age of 65 on any given day will someday require help with their activities of daily living. A full 35 percent of these individuals will ultimately reside in nursing homes.
If this is hard to wrap your head around, you have to understand the fact that your life expectancy is at least 85 years depending on your gender when you are 67 years of age. Life as an octogenarian is likely to very different than anything you can imagine until you experience it.
Nursing Home Costs
If you have to pay for a stay in a nursing home out of pocket, you may get a bit of sticker shock. The median annual cost for nursing home care in the Westport, CT area is over $220,000 according to Genworth Financial, and the numbers have been rising year-by-year.
One year is the average length of stay, and if you are married, you can double the possible expenses. More than half of people who receive care need it for more than a year, and 13 percent incur expenses for more than 5 years.
These costs could potentially consume all or part of the legacy that you would like to pass along to your loved ones.
Medicaid Planning
Now that you understand why Medicaid planning is important, we can share some important details. Since it is intended for people with sparse resources, the asset limit is just $1,600 in Connecticut.
This sounds like a very small amount of money when you are talking about your life savings, but some things are not countable, including your home. Though your place of residence is not counted, there is an equity limit that stands at $1.017 million in our state in 2024.
One vehicle, household items, and personal effects are not counted, and you can maintain possession of your wedding and engagement rings. Heirloom jewelry would also be exempt, along with up to $1,500 worth of whole life insurance. You can have the same amount set aside for final expenses, and unlimited term life is permitted.
When it comes to the assets that are counted, you could give gifts to your loved ones while you are still living to qualify for Medicaid. This takes intelligent planning because you have to complete all transfers at less than market value at least five years before you apply for coverage.
Funding a Medicaid trust is a viable solution for many people. If you go this route, the principal would not count for Medicaid eligibility purposes. You would not be able to access the principal, but you could continue to receive distributions of the trust’s earnings.
Schedule a Consultation Today!
As you can see, it is a bit tricky to position your assets with future Medicaid eligibility in mind because of this five-year look-back period. This is why it is important to discuss your situation with a licensed elder law attorney.
You can give us a call at 860-548-1000 to schedule a consultation at our Westport or Glastonbury, CT elder law offices, and you can alternatively use our contact form to send us a message.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.