Did you know the average cost of a nursing home in the United States currently tops over $8000 per month? While many rely upon long-term care insurance to cover the cost of a nursing home, unfortunately, there are also many people who wait until it is too late to obtain long-term care insurance. Many long-term care insurance companies will not accept an application for a policy once the applicant is 75 years or older, and may also deny applications from persons with diagnosed conditions, such as Alzheimer’s or Parkinson’s. Many people are often left fearful that they will simply have to pay out of pocket for long-term care, if they are unable to obtain long-term care insurance. Let us discuss what you can do when it is too late for long-term care insurance.
Obtaining Medicaid coverage is likely one of the best ways to cover the cost of long-term care. A person, however, must be eligible, meaning near the poverty level, to qualify for Medicaid. If you do not immediately require long-term care, you may have time to make yourself Medicaid eligible. There may be a few ways to do this. The creation of an irrevocable trust may be one of the most common ways. There are many ways to structure an irrevocable trust, and they can often be structured in a fashion that will allow you to remain in your home and have access to assets while removing these things from inclusion in the Medicaid eligibility calculation.
In addition to creating a trust, you may be able to gift your assets to family members. The United States has a $15,000 per person annual gift tax exemption. This means you can gift $15,000 per family member annually with no cap on the number of gifts you make.
When creating a trust or gifting your assets, in order to become Medicaid eligible, you should be aware of the lookback period. This is the period of time, usually five years, from the date of your Medicaid application that the government looks back at your financial transactions. If you have sheltered assets in a trust or gifted away assets, you may be subject to a penalty period in which you will not be Medicaid eligible. There may be some exceptions to the lookback period rules, which allow applicants to have transferred some assets to a spouse or on behalf of a disabled child. It is also possible to transfer your residence to a spouse or other family member.
If you have been denied long-term care insurance, do not despair. Reach out to our office and schedule a meeting time to discuss your options and planning strategies to cover the cost of long-term care.