A comprehensive estate plan will help accomplish several related goals. One estate planning component you may not have included in your plan yet is long-term care planning. Even if you are still relatively young, you need to think about – and plan for – the possibility that you or your spouse will need long-term care (LTC) later in life. To help you better understand, the Los Angeles Medi-Cal planning attorneys at Schomer Law Group, APC explain why it is important to plan for long-term care.
Your Odds of Needing Long-term Care
To understand why you need to consider adding a long-term care planning component, you need to know why such an addition is beneficial. The need to qualify for Medicaid benefits as a senior will come because of your need for long-term care (LTC). The need for long-term care is more likely than you may realize. At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime.
Paying for Long-Term Care
LTC costs are expensive. Across the nation, the average cost of a year in LTC for 2021 was over $100,000. California residents pay, on average, more than the national average. For 2021, the average cost of a year in LTC for California residents was almost $140,000. With an average length of stay of almost three years, you are looking at a LTC bill of over $400,000 for an average stay. Although you may rely heavily on Medicare as a senior to cover healthcare costs, Medicare won’t pay for LTC, and neither will your average health insurance policy unless you purchased a separate LTC policy. For this reason, more than half of all seniors currently in LTC depend on Medicaid to help cover their LTC expenses. Medicaid will cover LTC expenses; however, you must first qualify for Medicaid benefits.
Planning for Long-Term Care
Qualifying for Medicaid can be complicated and requires an applicant to meet Medicaid’s eligibility requirements for seniors. That, in turn, means you must meet the income and asset tests which impose very low limits on the amount of income you can have and the value of non-exempt assets you may own. The income limit is tied to the Federal Poverty Level and will change depending on which Medicaid category you apply under, your geographic location, and household size. The income limit, however, is not where most seniors encounter a problem. It is the extremely low asset limit that typically poses a problem for seniors who did not plan. In most states, an individual applicant cannot own “countable resources” valued at over $2,000 and still qualify for Medicaid. Medicaid does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone.
Waiting until the last minute to worry about qualifying for Medicaid puts your assets at risk because of the Medicaid “look-back” rule. The 30-month (60 in other states) California look-back rule allows Medicaid (referred to as “Medi-Cal” in California) to check for asset transfers made for less than fair market value within the last five years. If any are found, Medi-Cal may impose a waiting period during which time you will not be eligible for Medicaid benefits. Planning, however, allows you to protect your assets by putting them out of reach. It is for this reason that long-term care planning should be included in your overall estate plan.
Contact Los Angeles Medi-Cal Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about planning for long-term care or Medicaid planning, contact the experienced Los Angeles Medi-Cal planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.