Sometimes people learn about the importance of Medicaid planning when it is too late to act in the optimal manner.
Why would you care about Medicaid when you are going to be qualified for Medicare coverage as a senior citizen? The answer is that Medicare will not pay for an extended stay in a nursing home or an assisted living community.
In Iowa, a very limited percentage of Americans could easily pay these expenses out of their own pockets. When you use the current national averages the typical stay in a nursing home could come with a price tag somewhere in the vicinity of $200,000. This is clearly attention-getting, but the costs have been going up each year. If you need care a couple of decades from now the expenses could be considerably higher.
Because of the fact that Medicare won’t pay for long-term care, and most people eventually need it, the majority of people in nursing homes are getting assistance from Medicaid. This is why Medicaid planning in Iowa is important for many American senior citizens.
On a human level this is a somewhat complicated subject. You clearly don’t expect to become unable to handle your own day-to-day needs. Yes, you may slow down, and you may recognize that you have limitations. At the same time, most people are going to be very passionate about being self-sufficient, even if things aren’t as easy as they once were.
Because of this commitment to self-sufficiency you may not take steps to prepare for possible incapacity. You put Medicaid planning on the back burner, resolving to take the appropriate steps if and when they become necessary.
This may make sense on the surface, but you can wait too long. Medicaid planning should be initiated well in advance of the need for any type of living assistance, because there is a five-year look back period.
There is an upper asset limit of $2000 that you must stay within to qualify for Medicaid. As a result, people routinely spend down before applying by giving away assets to their loved ones. However, if you give away financial assets within five years of applying for the Medicaid program to assist with long-term care costs you will not be immediately eligible.
Your eligibility is delayed based on a formula that compares the amount of your divestitures to the average cost of long-term care in the state of Iowa.
Medicaid planning is time sensitive in that you should ideally give yourself enough time to spend down without being penalized. However, even if you did not plan ahead within an ideal time frame, you still may be able to utilize certain tried-and-true Medicaid planning techniques to optimize your position even though you got a late start.
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Ryan M. DenmanandDennis D. Duffy
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