Since people are living longer, planning for the possibility of long term health care is becoming a critical component of estate planning. Long term health care is costly. Whether the health care is provided in a nursing home, the patient's home or some intermediate care facility, costs can quickly deplete any but the largest estates. For example, nursing home care costs are currently running on an average of about $40,000 per year.
Long term health care planning should include consideration of long term care insurance or asset preservation where no long term care insurance is in place. Federal and State spousal anti-impoverishment laws and regulations allow patients to qualify for Medicaid benefits to pay for long term health care while significant assets are retained for the support and comfort of spouses and family members.
However, early planning is essential in order to help preserve assets. It is important to meet with an attorney with expertise in this area as early as possible to explore your rights and opportunities for asset preservation.
Long Term Care Insurance
Long term care insurance is an important and effective element of any comprehensive estate plan. However, it is best to shop for and purchase long term care insurance while you are healthy. Certain medical conditions will cause ineligibility for long term care insurance.
Long term care insurance is probably the best method of preserving assets when a family member requires long term health care. However, as noted above, long term care insurance isn't always an option.
The goals of Medicaid planning should include all of the following:
- Provide for the long-term care needs of the client (both spouses when a couple is involved).
- Preserve assets for the benefit of the well spouse or any other dependents.
- Reduce or eliminate the fear of impoverishment.
- Tap all existing sources of assistance to meet the costs of long-term care.
- Accurately advise the client of his care and financial options.
- Help the client to evaluate the benefits and limitations of the public health care system.
- Advise the client of the impact of any plan concerning long-term care on the client, the family, the estate, and the heirs.
- Balance estate planning, taxation, and asset preservation issues.
Once it is determined that an application for Medicaid benefits will be completed, there are two primary issues that need to be considered:
- Eligibility; and
Once it is determined that the preliminary requirements are met, the eligibility analysis focuses primarily on asset and income limitations. Among the things that need to be considered are:
- Exempt assets;
- Non-exempt assets;
- Ill person's asset and income limitations;
- Spouse's (if married) asset and income limitations;
- Transfer of assets
State Medicaid agencies are required to pursue recovery of amounts paid in benefits from the assets included in the probate estate upon the death of the ill person. Things that need to be considered include:
- Limitations on recovery;
- How are assets held;
- Options for protecting assets.
Again, early planning is essential to maximizing the options available for the preservation of assets for the spouse, dependents and heirs. It is critical to discuss these options with an attorney with expertise in this area of practice at your earliest opportunity.