Everyone is aware of the need for retirement planning, and you can enjoy your golden years to the fullest if you take the right steps to build a sufficient financial underpinning. You can spend quality time with your family and friends, travel, enjoy leisure activities, and simply cross things off your bucket list.
This can be one of the best periods of your life, but you should also consider the twilight years that will follow.
When you reach the age of 67, your life expectancy is at least 85 years depending on your gender. Life as an octogenarian is something that is hard to wrap your head around when you have been completely independent all of your life. It is very likely that you will require help with your activities of daily living when you become a part of this advanced age group.
Physical challenges can result in the need for nursing home care, and there are also cognitive impairments that can enter the picture. A very significant percentage of elders will in fact reside in nursing homes toward the end of their lives. These facilities are extremely expensive, so this is an eventuality to take very seriously.
If you are thinking that you are not concerned about the potential costs because you will qualify for Medicare when you are a senior, we have some bad news to pass along. Medicare will pay for convalescent care after an injury or illness when full recovery is anticipated, but it will not pay for the custodial care that nursing homes provide.
Medicaid Can Provide a Solution
Medicaid is another government health insurance program that will pay for long-term care.
Though Medicaid is only available to people with limited financial resources, most seniors in nursing homes are enrolled in the program. Many of them were never financially needy throughout their lives. With the appropriate advanced planning, you can preserve your resources for the benefit of your loved ones as you aim toward future Medicaid eligibility.
In Vermont, the limit on countable assets is $2000. One very positive dynamic is the fact that some things that you own do not count when Medicaid is determining your eligibility. At the top of the list is your home, but there is an equity limit that stands at $595,000 in our state during the current calendar year.
The healthy spouse is entitled to a Community Spouse Resource Allowance. This equates to half of the shared assets that are considered to be countable by the Medicaid program. That’s the good news, but the bad news is there is a limit of $128,640.
There is also an income limit, but a healthy spouse that is relying on their spouse’s income can be entitled to a Monthly Maintenance Needs Allowance. The maximum amount of this allowance in Vermont in 2020 is $3216, and the minimum is $2113.75.
To divest yourself of assets that would be counted, you could engage in a Medicaid spend down. This is typically going to involve giving gifts to your loved ones, and another option would be to fund an irrevocable Medicaid trust. Timing is key, because you have to complete the divestitures at least 60 months before you submit your application for Medicaid coverage.
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