Long-term care as you get older can become prohibitively expensive. Whether you need skilled assistance in your home to help you administer medication and maintain your property or will end up living in a nursing home, the cost can easily be many thousands of dollars a month.
Even if you dedicated a substantial portion of your income every paycheck toward a comprehensive retirement plan, the savings may not be enough to provide for the cost of long-term care indefinitely.
Additionally, failing to plan for long-term care could mean that you end up required to use all of your assets to pay for medical care, leaving nothing for a legacy for the people you love. If you do have an estate, the government can likely seize its assets to repay itself for any benefits you received.
You probably need to be young to afford long-term care insurance
Many people struggle to understand the different kinds of insurance coverage available for help and care as they get older. Most insurance policies, including Medicare, will not cover skilled in-home care or long-term residential care.
You will need a supplemental policy, known as long-term care insurance, to offset the expenses associated with residential care or nursing care as you age. However, these policies are often prohibitively expensive for adults in their 40s or 50s.
Only if you enroll in your early career, such as in your 20s or 30s, can you typically afford the coverage that you need to protect yourself in the future. The cost per month for these policies will increase substantially as your age goes up.
Medicaid is going to look back over five years of finances
If your income and assets currently meet the threshold to qualify for Medicaid, that doesn’t mean that you can just apply and get the benefits you need. The federal government will likely look back at all of your major financial transactions for the last five years.
They do this to prevent people from transferring assets or making gifts to loved ones to qualify for Medicaid. Simply put, you need to begin Medicaid planning at least five years before you will need those benefits.
Transferring assets now is the simplest approach to protecting them
The two most common asset protection strategies for those who wish to qualify for Medicaid in the future involve gifts to family members now or the creation of a trust.
You can gift family members a certain amount of money or other valuable assets every year up to a certain limit without incurring any tax liability for them. If you do this for multiple years, you can substantially diminish the access in your household, thereby ensuring that you will qualify for Medicaid when the time comes without needing to worry about a penalty.
If you don’t want to give your assets away to family members now, creating and funding a trust with assets including your home and your retirement account can allow you to have control over those assets without them affecting your Medicaid eligibility in the future.
The whole process is complex and typically requires both forethought and experience. Partnering with an experienced Louisiana long-term care planning attorney will make the process of protecting your legacy and ability to qualify for Medicaid in the future much streamlined and expeditious.