Medicaid is the healthcare safety net of our country. It is an insurance program that covers low-income individuals, providing health coverage for children, seniors and the disabled. Medicaid can be a major factor for many people when it comes to the financial planning of long-term care.
Unfortunately, there is a dangerous misconception that Medicare will cover all, or most, long-term care costs. This is far from the reality. Medicare benefits for long-term care are seriously limited. In fact, Medicare only pays for skilled care when deemed “medically necessary,” and it covers little to nothing for the personal care required by most seniors with chronic needs.
A long-term care plan is essential for all seniors, however, they may have no choice but to rely on Medicaid if their income isn’t sufficient to purchase long-term care insurance and they don’t have the money or assets to pay for it themselves. Medicaid also comes into play when a senior is deemed uninsurable. Medicaid planning used to be the main tool seniors used when evaluating long-term care costs. However, since the laws have changed significantly over the last decade, other tools may be more effective. Other alternatives may be long-term care insurance – or other asset protection techniques.
Even a relatively well-off senior can be reduced to the poverty level after medical and long-term care costs take hold. However, sometimes seniors will purposely transfer assets in order to qualify for Medicaid. This is a very risky proposition for many reasons. Some potential risks are listed below:
- The transfer recipient may mismanage the assets
- The transfer recipient may get divorced, leaving the ex-spouse entitled to a portion of the assets
- The required care may only be short term
- Medicaid regulations change over time
- Transfers can trigger capital gains taxes
- Transfers can trigger penalties when applying for Medicaid
Estate and life care planning can be quite overwhelming. Enlisting the help of a life care planning professional and a seasoned estate planning attorney can help make the process go much more smoothly. This kind of help is also your best chance at protecting your physical and financial well-being, now and in the future.
Learn more about Life Care Planning by contacting Bratton Scott today. You can meet with an experienced life care planner who will review your family’s needs and advise you about the best way to meet your long-term care goals.