As elder law attorneys, we advise clients that have concerns about the eventualities of aging. One of the most pressing issues is the matter of long-term care and expenses that go along with it. Many people are under the assumption that Medicare will pay for in-home care or a stay in a nursing home or assisted living community. In fact, the program will not generally pay for long-term care.
If you are thinking that it is likely that you will be able to take care of all your own day-to-day needs throughout your life, you should understand some relevant data. Approximately 70 percent of senior citizens will need help with their activities of daily living, according to the government website LongTermCare.gov.
Many individuals that need living assistance will ultimately reside in nursing homes during their twilight years, and they are extremely expensive. Genworth Financial tells us that the median annual charge for a private room in our area in 2018 was $137,970. They expect this figure to go up by 6 percent each year for the next five years, so the costs may be significantly higher if you need nursing home care 20 years from now.
Fortunately, there is a solution that can allow you to preserve resources if you require nursing home care at some point in time. Medicaid is a jointly administered federal/state government health insurance program. It will cover nursing home costs, but it is a need-based program, so you cannot immediately qualify if you have significant assets in your name.
The limit on countable assets in the state of Vermont is just $2,000 for an individual and $125,600 for a couple. That’s the bad news, but the good news is that some things that you own are not counted. If you own your own home, it is excluded, but there is an equity limit that stands at $585,000.00.
Other assets that are easily protectable is a vehicle, wedding rings, engagement rings, and heirloom jewelry are exempt, and your personal belongings and household items are not counted.
When it comes to the assets that are countable, you can give direct gifts to your loved ones to get them out of your name, but you have to be aware of the five your look back period. You cannot obtain immediate eligibility if you give away assets within five years of the date of your application submission.
Another option would be to convey assets into an income-only Medicaid trust. This would be an irrevocable trust, so you would be surrendering incidents of ownership. As a result, assets in the trust would not be counted if you apply for Medicaid to pay for long-term care.
You would not be able to touch the principal, but you could continue to receive income that is earned by assets that have been conveyed into the trust. This being stated, if you do apply for Medicaid, under program rules almost all the income would be absorbed by Medicaid. If you go this route, after you pass away, a beneficiary would assume ownership of the assets in the Medicaid trust.
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Our attorneys have developed a very useful worksheet that you can utilize to gain an understanding of the estate planning process. It will help you understand the steps that you need to take moving forward to adequately protect the interests of your loved ones.
This worksheet is being offered on a complimentary basis at the present time, so you have everything to gain and nothing to lose if you take advantage of this valuable resource. To obtain access to your copy, click this link and follow the simple instructions: Free Burlington, VT Estate Planning Worksheet.