If you have been fortunate enough to have employer sponsored, or privately funded, health insurance up to this point in your life, you may know very little about the Medicaid program. That lack of knowledge, however, could be a problem down the line if you ever need long-term care (LTC) – and the odds are fairly good that you will need LTC at some point in your life. Unless you can afford to pay for that care out of pocket, you will likely need to qualify for Medicaid. If you make the mistake of waiting until you need LTC to educate yourself about the Medicaid eligibility requirements, you could be putting your assets at risk. To help prevent you from making that mistake, the Fargo Medicaid lawyers from the German Law Group explain how the “look-back” period works.
Why Do You Need to Understand the Medicaid Eligibility Requirements?
If you have never before needed to rely on Medicaid to cover your health care costs, you are probably wondering why you will need to rely on it in the future. The answer can be found in the likelihood that you, or a spouse, will need long-term care at some point during your retirement years. When you reach retirement age, around age 65, you will stand about a 50 percent chance of needing LTC before the end of your life. With each passing year, those odds increase. At age 85, the likelihood of needing LTC will have increased to a 75 percent chance.
If you do end up needing LTC, you can expect to pay a high price for that care. As of 2016, the average monthly cost of LTC in Grand Forks was about $12,000 and the average length of stay about 2.5 years. The cost of LTC will only go up in the coming years. Experts predict that by 2036, that same month of LTC will cost you almost $20,000.
If you are accustomed to relying on health insurance to cover your healthcare expenses, this may not sound as problematic as it really is; however, most health insurance policies will not pay for LTC unless you purchased a separate LTC policy at an additional expense. Medicare won’t be able to help either because the Medicare program only covers LTC expenses when they follow an inpatient hospital stay – and even then, only for a short period of time. For over half of all seniors currently in LTC, the only viable option for help covering LTC costs is Medicaid.
Medicaid Eligibility and the Five-Year Look-Back Period
The good news in all of this is that Medicaid does cover LTC expenses. The bad news is that qualifying for Medicaid can be problematic if you failed to plan ahead by including Medicaid planning in your estate plan. Medicaid is intended to provide healthcare coverage for low income individuals and families. As such, the program uses both an income and an asset test when determining eligibility. The assets test limits the value of your non-exempt assets to just $2,000. If your assets exceed that limit, Medicaid will impose a waiting period during which time you will be expected to “spend-down” your assets. Basically, this means you are expected to sell those assets and use the profits to cover your LTC expenses. Your nest egg you spent a lifetime accumulating could be gone in months. The “look-back” period refers to the fact that Medicaid may also review your finances for the five-year period prior to application looking for any asset transfers for less than fair market value. If any are uncovered, the value of the asset will be imputed back into your estate when determining your eligibility. In essence, the look-back period rule prevents you from transferring assets out of your estate at the last minute when you realize you will need to qualify for Medicaid benefits. The only way to be certain that you will qualify for Medicaid if you need it without losing assets is to include Medicaid planning in your estate plan now.
If you have additional question or concerns regarding the Medicaid look-back rule, or Medicaid planning in general, contact the experienced Medicaid planning attorneys at German Law Group by calling 701-738-0060 to schedule an appointment.