The Costs of Long-Term Care

The U.S. Department of Health and Human Services states that the majority of Americans will rely on Medicaid for long-term care at some point during their lives. Medicaid is the only government program that assists in paying for long term care for the elderly and disabled. It is a federal and state program that helps with medical costs for some people with limited income and resources, regardless of age. Medicaid also offers benefits not covered by Medicare, like nursing home care and personal care services. In Colorado, the home equity exception was set at $595,000 for the year 2020.

Medicaid in Colorado

To qualify for Medicare an applicant must meet strict income and asset guidelines. Medicaid recipients in Colorado are generally not allowed to have more than $2,000 in countable assets. These assets include such as checking, savings, and investment accounts. There are exceptions for some assets such as a principal residence, vehicle, life insurance, and some personal property. Be that as it may, there are limitations to these exemptions as well.

Americans with higher levels of assets and income will often be forced to ‘spend down’ their savings. They also need to reduce other resources before they can meet the Medicaid threshold and qualify for long-term care. Initially, they will pay for long-term care with their own savings, only after everything else runs out they can qualify for Medicaid. The average monthly cost of care for an assisted living facility is north of $7,000. Those with little savings risk paying these fees without government help.

Spending down assets to qualify for Medicaid long-term care means almost nothing will be left behind for the next generation. Americans should not be forced to decide between paying for the care they need during their later years or leaving nothing behind for their loved ones.

What are Spousal Impoverishment Protections?

Spousal Impoverishment Protections are rules used to prevent the spouse of a Medicaid applicant from losing all his or her assets due to their spouse’s long-term-care needs. A spouse is allowed to keep an exempt amount of funds and income under the Community Spouse Resource Allowance. Still, the limits for these exemptions are hardly generous and still need many couples to pay for long-term care needs. In Colorado, the allowed assets for non-applicant spouses were set at $128,640 for the year 2020.

Medicaid Planning using Annuities

Certain annuities can also be exempt assets under the Medicaid requirements. Not every type of annuity will be exempt, and usually, only an immediate irrevocable annuity may qualify. The annuity must also name the state as the beneficiary upon death. This means they will get paid back for any Medicaid benefits paid before the family members recover any funds left. It is important to have a piece of advice on the latest requirements when considering annuities for Medicaid eligibility

What are Spousal Impoverishment Protections?

Spousal Impoverishment Protections are rules used to prevent the spouse of a Medicaid applicant from losing all his or her assets due to their spouse’s long term-care needs. A spouse is allowed to keep an exempt amount of funds and income under the Community Spouse Resource Allowance, but the limits for these exemptions are hardly generous and still require many couples to pay for long-term care needs. In Colorado, the allowed assets for non-applicant spouses was set at $128,640 for the year 2020.


Medicaid Planning using Annuities

One of the assets that are exempt under the Medicaid requirements are certain annuities. Not every type of annuity will be exempt, and usually only an immediate irrevocable annuity may qualify. The annuity must also name the state as the beneficiary upon death, which means they will get paid back for any Medicaid benefits paid before the family members recover any funds left. When considering annuities for Medicaid eligibility it is important to be well advised on the latest requirements.

What are Medicaid Asset Protection Trusts?

Medicaid Asset Protection Trusts (MAPT) can be a crucial solution to meet Medicaid’s strict asset limitations. These types of trusts shield a Medicaid applicant’s assets so it is not considered in Medicaid eligibility.

This will make an applicant with excess assets to become Medicaid eligible and receive the care they need. This includes home care or nursing homestays. Any assets placed in a Medicaid Asset Protection Trust are no longer considered as owned by the individual applicant. Yet, if a house is placed in a trust, the grantor can still keep the right to live there. The grantor can also keep the right to receive income from any business or other income-producing assets in the trust.

It is crucial to plan well in advance to take full advantage of a Medicaid Asset Protection Trust. To receive Medicaid, an applicant must wait about five years after placing assets into a trust to enter a nursing home or apply for long-term care. Once the trust is aged, any assets placed in the trust will be out of reach of Medicaid and other future creditors. It means that the Medicaid Asset Protection Trusts can help preserve the wealth that would have otherwise been spent in medical care. This wealth could be used to help children and other loved ones.

Using a Medicaid Asset Protection Trust to protect assets is a valid legal solution. The right planning can make a significant difference in your long-term financial situation.

using-gift-transfers-to-qualify-medicaid

Using gift transfers to qualify for Medicaid

With proper planning, it is possible to use outright gifts to family members and other loved ones to reduce the number of assets held. Gifting can be a valuable part of Medicaid planning. Just like with a Medicaid Asset Protection Trust, any gifts should be completed five years before applying for long-term care. Unlike a trust, an outright gift means having no control over any assets given away. Additionally, any gifts to family members outside of trust are unlikely to be secured from future creditors. Any funds given to children outright could be put at risk in case of a business dispute, lawsuit, or divorce.

Medicaid Asset Protection Trust and Long-Term Care Insurance

Less than ten percent of Americans have a long-term care insurance policy in place. As people live longer, the cost of long-term care insurance continues to become even more expensive. Older Americans can expect to pay thousands of dollars each year for long-term care insurance. It doesn't even matter where in the country they live in. People avoid long-term care insurance due to high costs and inconsistent coverage restrictions. Many Americans fail to realize the fact that most will need some form of long-term care or help during their lifetime.

Long-term care insurance must be bought early before being needed and is often an awfully expensive option. Compared to it, the cost of establishing a Medicaid Asset Protection Trust instead is almost always much less.

Medicare and Medicaid

Medicare is different from Medicaid. Medicaid provides health insurance for Americans aged 65 and older. It also provides for some younger people with disability status. Though, younger people need to be determined by the Social Security Administration. Medicare is divided into four different parts. Part A includes hospital visits, nursing, and hospice services. Part B involves doctor visits and administered prescription drugs. Part C is a combination of A&B. Part D covers self-administered prescription drugs. Home care is available through Medicare but, recipients must meet a lot of requirements for home health care. The main requirement is that the patient must be homebound. The Centers for Medicare and Medicaid Services has a long list for the criteria of meeting the homebound need. Many of it will leave beneficiaries with no access to the home care they may need.


Medicaid Planning is for the Middle Class

Thinking about long-term care can be disconcerting. Understanding the ins and outs of Medicaid can be confusing and the rules vary from state to stat. Qualification requirements, benefit eligibility, and out of pocket expenses are also things you need to consider. Those with few assets might be covered by Medicaid regardless of any planning. The rich on the other hand can afford to pay out of pocket for long-term care or long-term care insurance without compromising the family’s future. For many in the middle class however, the costs of long-term care can erase decades of savings in a few months.

Having a long-term care plan in place years in advance could be one of the best financial decisions. Take the first step to ensure you and your family are better protected. Set up a meeting with our experienced team of lawyers to learn more about protecting your assets from the excessive costs of medical care.

Medicaid FAQs

How long does it take to get approved by Medicaid?

Applications can generally take three or four months or longer, but the timeline depends greatly on how much time it takes to obtain all the necessary information and documentation.

How do you apply for medicaid?

There are several options but we recommend contacting the Long Term Care division in the county where an individual will file and submitting the application by email.


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