If you plan effectively, you can generate the resources that you need to enjoy your golden years to the fullest. You can travel, cross things off your bucket list, enjoy leisure activities, and spend quality time with your family and friends.
Most people are well aware of the fact that you have to prepare for this period of your life in advance. However, many of the same individuals do not consider the twilight years that will follow, and this is a huge mistake that can yield significant negative consequences.
Medicare Limitations
If you pay self-employment or FICA taxes when you are working for at least 10 years, you will qualify for Medicare when you reach the age of 65 under currently existing laws. This is also true if you are married and your spouse has met the work/tax requirement, even if you have not paid into the program sufficiently.
Medicare will definitely provide a strong source of fundamental health insurance when you are a senior citizen, but it does not pay for everything in full. There are co-payments, deductibles, and premiums that must be paid out-of-pocket, and they can be considerable under some circumstances.
Plus, Medicare Part B, which is the portion of the program that pays for visits to doctors and outpatient care, will only pay for 80% of covered treatments and services. You have to pay the remainder yourself, so you should definitely take this into consideration when you are devising your retirement plan.
In addition to these out-of-pocket costs, there is a major void in the program that can take a heavy toll on your legacy. Medicare will not pay for a stay in a nursing home or any other type of custodial care. This is a very big deal, because nursing homes are quite expensive.
We practice law in Smithtown on Long Island. You can expect to pay more than $125,000 a year for nursing home care in our area. People sometimes require multiple years of care, and if you are married, and the expenses could be doubled.
Depending on the extent of your resources, everything that you have always intended to leave to your loved ones may be consumed by nursing home costs.
Medicaid Planning
All of the above sounds like rather gloomy news, but there is a solution that informed people take advantage of to preserve their resources. Medicaid is a jointly administered federal/state government health insurance program that will pay for long-term care if you can gain eligibility.
Since it is a need-based program, you cannot qualify if you have significant assets in your own name. In New York, the limit is $15,450, but this is for countable assets. This is the figure after an inflation adjustment was added for 2019.
Some items that you own would not be counted if you were to apply for Medicaid to pay for long-term care. Your home is not a countable asset, but there is an equity limit. The individual states have some latitude with regard to the threshold, and in our state, the maximum is $878,000 in 2019.
In some instances, a married person will require nursing home care, and the other spouse will still be capable of independent living. Under these circumstances, the healthy spouse would be entitled to a Medicaid Community Spouse Resource Allowance. This is equal to half of the shared countable assets, but there is a limit of $126,420. There is also a minimum allowance of $74,820.
To get assets out of your name to qualify for Medicaid, you could give gifts to your children or other loved ones before you submit your application. However, you have to be aware of the five-year look back period. All divestitures must be completed 60 months before you apply for Medicaid if you want to obtain immediate eligibility.
Attend a Free Seminar!
Our Smithtown nursing home lawyers are holding a number of informative seminars over the coming weeks. There is no charge to attend these sessions, so you have everything to gain and nothing to lose if you register for the date that fits into your schedule. To do just that, visit our seminar page and follow the simple instructions.
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