Preparing for the eventualities of aging is going to involve gaining an understanding of Medicare and Medicaid. You may wonder why Medicaid is a factor. As a working person you paid into the Medicare program all of your life, and you expect to be eligible. Medicaid is a program that is in place for people who are essentially poor. Why would Medicaid be relevant to you as a senior citizen?
The reason why Medicaid is quite relevant to many senior citizens is because of the fact that Medicare will not pay for an extended stay in a long-term care facility. If you were to need convalescent care after surgery Medicare would help for as long as 100 days. But, true long-term care is not covered by Medicare.
Your retirement savings may not be enough to cover long-term care costs, especially if you would like to be able to leave something behind to your loved ones. The average annual expense for a private room in a nursing home across the United States last year was over $90,000.
According to a government survey, the average length of stay is around two years and three months. Of course some people stay longer than the average. One out of every 10 nursing home residents will spend at least five years in the home.
This is where Medicaid comes in. Medicaid will assist with long-term care costs, but there are upper asset limits that you have to stay within to qualify for the program because it is in fact intended for people with significant financial need.
Your first thought may be that you could give away your assets to your loved ones if you find out that you need to go to a long-term care facility. The Medicaid program does not want people to look at it that way. Medicaid is theoretically supposed to be a safety net that is in place after you have exhausted all of your resources.
Because of the above there is a five-year look back period. If you were to divest yourself of assets within five years of submitting your application for Medicaid you could be penalized. The penalty would delay your eligibility.
When you look at the big picture the answer to the question of whether or not you can give away your assets to qualify for Medicaid is yes and no. You can give away assets or “spend down.” However, you have to conclude your divestitures at least five years prior to applying for Medicaid.
Medicaid planning can be a bit complicated, especially when you factor in the needs of the healthy spouse and Medicaid reimbursement rules. The best way to go about it is with the assistance of a licensed Iowa elder law attorney.
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Ryan M. DenmanandDennis D. Duffy
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