An all-inclusive estate plan can do much more than just plan for the distribution of your assets after you are gone. In fact, one of the most important benefits of a well thought out estate plan is the protection of you and your assets while you are alive. For many people, that means including a Medicaid planning component in their overall estate plan. To explain, a Murfreesboro Medicaid planning attorney at Bennett | Michael | Hornsby discusses why you should include Medicaid planning in your estate plan.
Will You Need Long-Term Care?
Although there is no way to know with certainty who will require long-term care (LTC) and who will not, we do know that
everyone stands about a 70 percent chance of eventually needing some type of LTC services before the end of their lives when they reach their retirement years. We also know that the longer we live, the more likely it is that we will need LTC. Given those odds, it only makes sense to plan for the possibility that you (or a spouse/partner) will need some type of LTC down the road.
How Will You Pay for Long-Term Care?
For most people, the need to plan for the possibility that they will need LTC stems from the high cost of that care. Nationwide, the average cost of a year in a nursing home facility ran just over $100,000 for 2022. While Tennessee residents pay, on average, a bit less than the national average at just over $90,000 per year for 2022, nursing home care is still expensive, as are other types of long-term care services. Home health aide and assisted living expenses averaged about $55,000 and $50,000, respectively, for 2022.
As a senior, you may become accustomed to Medicare picking up the tab for most healthcare services and expenses; however, Medicare will not cover most LTC expenses. Likewise, most private health insurance plans also exclude coverage for long-term care. Unless you have the financial resources to pay for LTC out-of-pocket, that leaves Medicaid as your only option. While Medicaid does cover LTC services, you must qualify for the program first.
Because Medicaid is intended to provide health insurance coverage for low-income individuals and families, an applicant cannot have income or assets that exceed the program limits. The problem is that those limits are very low. If you are applying as an individual, for instance, you cannot own non-exempt assets valued at over $2,000. Your home (up to a $688,000 equity limit as of 2023) and a few other assets are exempt; however, after a lifetime of working and saving you may easily own assets valued at significantly more than the program limit. If that is the case, your application will be denied, and you will be forced to use those assets to cover the cost of LTC.
How Can Medicaid Planning Help?
Medicaid planning uses legal tools and strategies to protect your assets while also setting you up to qualify for Medicaid down the road if you need it to help with the high cost of long-term care. Your estate planning attorney will discuss what strategies are likely to work best given your circumstances, but a common tool used in a Medicaid planning component is the creation of a Medicaid trust. A Medicaid trust is a specialized type of irrevocable trust that can be used to shield your assets while simultaneously assuring your eligibility for Medicaid.
If you suddenly need to qualify for Medicaid yet failed to incorporate a Medicaid planning component into your estate plan years ago, you may still be able to take advantage of some last-minute Medicaid planning strategies, such as converting non-exempt assets to exempt assets.
Contact a Murfreesboro Elder Law Attorney
If you have additional questions or concerns about why you should include Medicaid planning in your estate plan, consult with an experienced Murfreesboro Medicaid planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.
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