Last-Minute Medicaid Planning – Can It Still Help Me?

Including Medicaid planning tools and strategies in your estate plan early on is ideal; however, not everyone does. If you are someone who failed to include Medicaid planning in your estate plan and suddenly needs to qualify for Medicaid, your assets could be at risk. While it is certainly best to think ahead and plan for the need to qualify for Medicaid, the Essex Junction Medicaid planning attorneys at Unsworth LaPlante, PLLC explain how you may still be able to use last-minute Medicaid planning strategies to protect some of your assets.

Will You Need to Qualify for Medicaid?

If you find yourself in need of the type of care that can only be provided by a long-term care facility, you are hardly alone.  At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime. As you have undoubtedly discovered, the cost of that care is not cheap. Nationwide, the average cost of a year in LTC for 2021 was over $100,000. For that same year, the average yearly cost for a private room in LTC was more than $130,000 in Vermont. 

The real problem, however, comes when you realize that you may be forced to cover those expenses out of pocket. Like many seniors, you may rely on Medicare to pay for most of your healthcare expenses; however, you won’t be able to turn to Medicare for LTC expenses because Medicare won’t cover them. Neither will most private health insurance policies unless you purchased a separate long-term care policy. Not surprisingly, over half of all seniors currently in an LTC facility rely on Medicaid for help paying their LTC bills. For Medicaid to help though, you must first qualify for benefits, and if you did not include Medicaid planning in your estate plan, qualifying for Medicaid may be difficult.

Medicaid Eligibility Guidelines

To qualify for Medicaid benefits, you will need to meet Medicaid’s eligibility requirements for seniors, meaning you must meet the income and asset tests. The income limit is tied to the Federal Poverty Level and will change depending on the Medicaid category, your geographic location, and household size. The income limit is not where most seniors encounter a problem though. It is the extremely low asset limit that typically poses a problem for seniors who did not plan accordingly. In most states, an individual applicant cannot own “countable resources” valued at over $2,000. Medicaid does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone. Furthermore, Medicaid’s five-year “look-back” rule prohibits you from transferring your non-exempt assets at the last minute in anticipation of the need to qualify for Medicaid.

Last-Minute Medicaid Planning

While you may not be able to protect all your non-exempt assets using last-minute Medicaid planning strategies, you may be able to protect some.  The key is to consult with an experienced Medicaid planning attorney as soon as you realize you need to qualify for Medicaid. The tools and strategies implemented in your situation will depend on your unique circumstances; however, one goal will be to legally convert as many non-exempt assets as possible into exempt assets. For instance, because you’re the equity in your home is an exempt asset (up to a limit), you might be able to take your savings and pay off your mortgage, thereby converting the non-exempt savings funds into exempt equity.

Contact Essex Junction Medicaid Planning Attorneys

For more information, please attend one of our upcoming FREE webinars. If you have questions or concerns about last-minute Medicaid planning, contact the experienced Essex Junction Medicaid planning attorneys at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.