Planning ahead for long-term care isn’t just prudent, it is essential to preserving your hard-earned assets. Waiting until care is immediately needed leaves little time for strategic planning and costly consequences. However, planning ahead allows you to leave something behind to your loved ones.
Nursing home care or at-home care is costly. Not planning ahead can cause you to spend your resources out of pocket until you only have $2,000 of countable resources such that you would qualify for Medicaid. Countable resources include: cash and bank accounts, retirement accounts, real estate (other than your primary home until death), second vehicles, and valuable personal property. Non-countable assets include: your primary residence if you and your spouse live in it, one vehicle, prepaid funeral plans, personal belongings and household items, and assets in certain irrevocable trusts.
Medicaid pre-planning is a process of rearranging your finances and assets well in advance of needing long term care. Without planning, you may be forced to spend most of your savings in order to qualify for Medicaid. With monthly nursing home bills averaging at about $10,000 per month, it is understandable how individuals can deplete their entire life savings in a matter of months prior to qualifying for Medicaid.
The goal is to protect these assets for your and your family’s benefit. Pre-planning uses legal tools such as irrevocable trusts or annuities to move assets out of your name in a way that complies with Medicaid rules. Transferring assets to an Irrevocable Medicaid Asset Protection Trust is a common way of achieving this goal. Improper gifting can trigger a penalty period of Medicaid ineligibility; but transfers to a trust is an exemption.
Ohio participates in Medicaid estate recovery, which allows the state to seek reimbursement for Medicaid benefits after your death. That often means placing a claim against your home or estate, even if you had little income while you were alive.
If you start now, and make proper transfers, your assets such as your home, can be entirely protected from Medicaid estate recovery. Ohio enforces a five-year look back on asset transfers. Ideally, you should consider pre-planning at least five years prior to needing long-term care. If you transfer your home and assets to a Medicaid Asset Protection Trust today, and in 2030 you need nursing care and to qualify for Medicaid, when you die, the state will have no claim on your home or trust assets. Your beneficiaries will inherit the home and savings without probate or Medicaid estate recovery interference.
Medicaid pre-planning is about control, peace of mind, and financial security. It helps you avoid a financial crisis during a health crisis and gives you the best chance of preserving your home and savings. Don’t wait for a diagnosis or a fall to start planning. If you are in your 50s or 60s, or are caring for aging parents, now is the time to start. Contact the experienced attorneys of Cavitch Familo & Durkin to assist you with your Medicaid planning needs.