Susan and Jim worked hard their entire lives to create a comfortable nest egg that would last throughout retirement and allow them to leave an inheritance for their children and grandchildren. They were well-off but knew that the costs of long-term care, averaging close to $20,000/ month in a nursing home and $8,000/ month for home care, would wipe out their life savings in short order. They also knew that friends and neighbors in their position had taken steps to protect assets.
There are many people like Susan and Jim: couples and families with too much money to qualify for Medicaid benefits now but too little money to pay for their own long-term care expenses for very long without depleting the family’s assets. Luckily, they don’t have to.
Protecting Assets to Qualify for Medicaid Nursing Home Benefits
To avoid spending down assets on the cost of nursing home care, it is critical to engage in asset protection planning by establishing an irrevocable Asset Protection Trust. But be aware: in order to protect assets, the trust must be irrevocable. A revocable trust does not protect assets. Almost any type of asset may be held in a trust, such as bank accounts, title to your home, brokerage accounts, etc. The key is to plan ahead; currently, an Asset Protection Trust must be established five years in advance (the current look-back period) in order to protect assets for Medicaid eligibility purposes. Since no one knows when a health care crisis may occur, early planning is crucial.
Susan and Jim were relieved to learn they could qualify for Medicaid in the future and didn’t have to spend their life savings to do so. They found comfort in the fact that they would have access to the best possible care while still leaving an inheritance to their children and grandchildren.
Medicaid Home Care: The New Look Back Period
Most of us want to live in our homes for as long as we can. New York recently imposed a 30 month Medicaid look-back period for home care services. Any transfers of assets made during or after October 1, 2020 will result in a penalty period in the same way that the penalty is calculated for the 5-year look back for Institutional Medicaid benefits. Asset Protection Trusts can be used in the Medicaid Home Care context to preserve assets and secure the earliest possible Medicaid eligibility date. Again, because of the new law and look back period, early planning is key.
Plan Today to Live Your Best Life
The best time to engage in Medicaid and asset protection planning is well before a health care crisis occurs. Early planning allows you to keep your options open and to receive care where you want it, such as at home, in an assisted living, or to protect assets from spend-down should you require nursing home care. That said, it’s never too late to protect your hard-earned assets. Even if you’re already in a nursing home, we can still help.
Jennifer B. Cona, Esq. is the Founder and Managing Partner of Cona Elder Law PLLC. Cona Elder Law is an award-winning law firm concentrating in the areas of elder law, estate planning, estate administration and litigation, and health care law. The firm has been ranked the #1 Elder Law Firm by Long Island Business News for eight consecutive years. For additional information, visit www.conaelderlaw.com.
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