Medicaid planning is important for many senior citizens, though you may not understand why at first. As someone who has paid into the Medicare program throughout your working career you may wonder why Medicaid would be relevant to you as an elder American.
The reason why Medicaid planning is relevant is because Medicare won’t pay for an extended stay in a nursing home or an assisted living community.
These facilities come with some hefty price tags. Here in the greater New York area the average cost of nursing home care exceeds $100,000 per year. About 10 percent of people in nursing homes remain in the facilities for at least five years. The average length of stay is around two years and three months.
Medicaid is the solution for many people. In fact, the majority of the long-term care that is being received in the United States is paid for by the Medicaid program. This is in spite of the fact that the upper resource limit for Medicaid eligibility is just $2000.
The way that people qualify for Medicaid even if they have not been poor throughout their lives is by spending down. This is somewhat self-explanatory. You spend or give away your financial assets in advance of applying for Medicaid benefits.
However, you want to make sure that you plan ahead well in advance. If you decide to give away assets during the week before you enter a nursing home you will have waited too long.
With the Medicaid program there is a five year look back period. If you divest yourself of assets within five years of submitting your application for Medicaid coverage you will suffer a penalty. This penalty will delay your benefit eligibility.
The Medicaid program will compare the amount of the divestitures to the average cost of long-term care in the state of New York to determine the duration of the penalty. For example, if the average cost of long-term care was $100,000 annually, and you gave away $300,000, your eligibility would be delayed by three years.
With the above in mind you can see why it is important to get your Medicaid planning efforts started well in advance of the need for a long-term care. When you work with a licensed elder law attorney to put a plan in place you can position your assets optimally.
If you’re interested in learning more about the Medicaid program we would like to invite you to take advantage of a valuable resource that we are offering our readers. Our firm has compiled a number of different special reports that are available free of charge. One of these reports covers Medicaid planning in detail. To access your version of the report, simply click this link: New York Medicaid Planning Report.