If you are at, or near, retirement age, and you have never before needed to qualify for Medicaid benefits, you may be wondering why people are always talking about “Medicaid planning?” Why would you need to include Medicaid planning in your overall estate plan? Along the same lines, why would you ever need a Medicaid attorney if you have never before been a Medicaid recipient? These questions are understandable if you know very little about Medicaid for the aged and why qualifying for Medicaid may be both necessary, and difficult, at some point in your near future.
What Is Medicaid?
Medicaid is a federal program that provides healthcare benefits to low income individuals, families, the elderly and the disabled. Although Medicaid is primarily funded by the U.S. federal government, it is administered by the individual states. As a result, both the eligibility requirements and the available benefits can vary somewhat form one state to the other; however, all states impose both an income and an asset limit because the program is intended to help low income recipients.
Why Would I Need Medicaid?
If you have been fortunate enough to be covered by employer sponsored or private health insurance for your entire working years, you are probably wondering why you would suddenly need to qualify for Medicaid benefits. The answer can be found in both the likelihood that you (or a spouse) will eventually need long-term care and the high cost of that care. When you enter your retirement years you stand about a 50 percent chance of one day needing long-term care (LTC) and those odds increase with each passing year. The cost of that care can be exorbitant. Nationwide, the average cost of a year in LTC is about $80,000 and the average length of stay 2.5 years. What you may not realize is that your basic healthcare insurance will probably not cover LTC expenses unless you paid for a separate LTC rider. Unfortunately, Medicare also excludes LTC expenses except under very narrow circumstances, and even then only for a short period of time.
Why Is Qualifying for Medicaid Problematic?
So now you know why you might one day need Medicaid. What is the problem with qualifying? The problem can be found in the Medicaid income and asset limits that are imposed on all applicants. As an individual applicant you cannot have income that exceeds the program limit, a limit which is tied to the Federal Poverty Level (FPL). As a retiree on a fixed income, your income may not be the biggest problem though. An individual applicant must also not have “countable resources” valued at over the $2,000 limit. Simply transferring any assets that are over the limit is not an option either because Medicaid uses a five-year “look-back” period. The look-back period allows Medicaid to review your finances for the five-year period leading up to your application. Any assets transfers for less than full market value will questioned and may ultimately be discounted and the value of the assets imputed back into your estate.
How Can a Medicaid Attorney Help?
Now we have arrived at the need for Medicaid planning. A Medicaid attorney can help you to include Medicaid planning in your comprehensive estate plan long before you actually need to qualify for Medicaid benefits. Doing so ensures that your hard-earned assets are protected and sets you up to be eligible for Medicaid if you need it in the future. If you failed to include Medicaid planning in your estate plan and suddenly find yourself in need of Medicaid benefits, a Medicaid attorney may still be able to assist you by using some of the last minute Medicaid planning strategies to help protect your assets. For example, you might be able to convert a non-exempt asset to an exempt asset by using your savings to pay off your mortgage. Most states – including Illinois — exempt a significant amount of equity in a primary residence. Therefore, by paying off your mortgage you convert a non-exempt asset (your cash savings) into an exempt asset (equity in your home) without violating the asset transfer rules used by Medicaid.
If you have additional questions or concerns regarding the need for Medicaid planning, contact the experienced Illinois Medicaid attorneys at Hedecker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.