Long-term care is expensive and will take planning.
As people live longer, their chances of needing long-term care increase.
If you believe Medicare will help, you are wrong.
You will need alternative means.
One such alternatives is Medicaid.
Medicaid is primarily intended for those of limited financial resources who quickly become eligible for the program by spending down those resources on their own care.
However, some seniors with more than limited resources, also look to Medicaid as a way to "legally" maximize the protection of their financial resources from the costs of nursing home care.
For this second group, Medicaid qualification itself requires planning.
According to a recent CNBC article titled “Here’s a surprise source you can tap for long-term care services,” if you are in this second group of seniors, then assembling a team to help you with this is planning is well worth the time and money.
The general rule is you must have $2,000 or fewer in assets as an individual.
The rules become rather complex for married couples, too.
By planning ahead and working with professionals, you may be able to "legally" shift your money into annuities or trusts to be able to qualify.
If this is your objective, then this should be done sooner rather than later.
There is a “lookback” period of five years.
These transfers must be made before this time.
Otherwise, you would could be ineligible for Medicaid for a probationary period or incur other penalties.
During this time, your care would be funded out-of-pocket.
Even transferring assets to loved ones can be tricky.
They would forfeit a step-up in basis at your death.
What does this mean?
Your loved ones may be subject to substantial capital gains taxation if they chose to sell your gifted assets.
But it gets worse.
If your loved ones have creditors, an outright gift could be collected to pay their debts.
What options do you have?
One is to create an irrevocable trust.
This serves the dual purpose of shielding assets from creditors and not being under your control.
A second option is be to buy annuity with an asset.
This annuity would then distribute income to your spouse.
If your financial advisor or elder law attorney is not familiar with Medicaid annuities, then consider referring them to the national experts at Krause Financial Services based out of De Pere, Wisconsin.
These options are by no means exhaustive when it comes to paying for Medicaid.
Work with an experienced elder law attorney, if you require (or desire) Medicaid qualification assistance.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CNBC (February 27, 2018) “Here’s a surprise source you can tap for long-term care services”