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5 Things Every Senior Should Know About Medicaid Planning

Sep 2, 2022 | Estate Planning

If you’re nearing retirement, you need to start thinking about the future (if you haven’t already!). There are two big mistakes that middle-aged and senior adults tend to make when it comes to planning ahead. The first is to procrastinate, as no one is guaranteed tomorrow, and not having your affairs in order can cause a lot of stress and financial strain for your family if something happens to you. The second is to only plan for what happens to your estate after your death; if you only have a will in place, for example, it can only help your family financially when you pass away. You need to plan today for what will happen to your hard-earned money, to your family, and to you during the golden years of your life, including planning for Medicaid! 

Medicaid planning is a strategy that can help you protect your life savings from the high costs of nursing home care, should you need it. At Daly Law Offices, we have over 14 years of experience helping people in Pennsylvania navigate Medicaid planning issues, and we know what you need to do to find peace of mind. Most people aren’t familiar with what Medicaid planning entails, but it is an extremely important process that every senior needs to understand. 

Here are 5 things you should know about Medicaid planning in Pennsylvania, especially if you are over the age of 65! 

#1: Your Likelihood Of Needing Long-Term Care & How Much It Costs

Many people don’t think that they need to plan for Medicaid because they don’t realize a) that they will probably need it at some point in the last years of their life and b) that it is most likely too expensive for them to afford, but both of these things are true. 

Recently, the RAND Corporation published a study that found that the average American’s risk of needing nursing home care at some point in their lifetime is “substantially” greater than previous research suggested. Among persons currently aged 57 – 61 – which isn’t even considered a “senior” by many – an estimated 56% will need to stay in a nursing home for at least one night. The average nursing home stay in a study group was actually much longer – 272 nights – and for 10% of adults in that group, the stay was an average of more than 1,000 nights. 

In Pennsylvania, the average monthly cost of a private or semi-private room in a nursing home or skilled nursing facility ranges from $3,500 to $10,000; again, that’s per month. The RAND study found that 5% of older Americans spend $47,000 or more over their lifetime in long-term care costs. If you have to stay in a nursing home for your final few years, that could cost hundreds of thousands of dollars. 

All these numbers to say, if you are over the age of 55, and especially if you are over 65, you will likely require long-term care for some period of time in the near future, and you may not be able to pay for it out of your own pocket. Your private health insurance probably does not cover nursing home care, and Medicaid also does not cover these costs. That’s why Medicaid planning is so critical!

#2: What Medicaid Planning Is

Understanding why Medicaid planning provides necessary protection for your estate and provision for your future care begins with knowing what the process is and how it works. 

Medicaid is a government-funded financial aid program that provides critical health insurance coverage for countless Americans of all ages, including helping to fund the cost of nursing care, bed stays, and more for elderly adults.

While many American seniors hesitate to rely on government and state-funded programs for financial and medical assistance, these programs exist solely to help, and those in need should feel empowered to apply. Medicaid is a great resource and source of relief for seniors and their families who are faced with paying tens of thousands or hundreds of thousands of dollars for nursing home care! 

However, the Medicaid application process is complicated, and there are strict income and resource requirements that you must meet in order to qualify for aid. Unfortunately, many seniors have “too much” to be accepted, but don’t have enough to afford nursing home care, leaving them in a difficult catch-22. That’s where Medicaid planning comes in. 

Medicaid planning is the process of securing your assets so that they don’t get eaten up by nursing home costs and don’t render you ineligible for government assistance. You can convert “countable” assets to “non-countable” assets using a number of different strategies (such as moving assets into trusts) so that they are shielded from Medicaid and will not disqualify you, but you will still be able to access them.

#3: Why Medicaid Planning Is So Beneficial

If you don’t secure your assets now, and you do end up needing to go into a nursing home, you and your family could face a financial crisis. Planning for Medicaid reduces the risk of you losing your life savings to the nursing home due to an unexpected illness or injury and reduces the risk of your family being burdened by the heavy financial weight of your care, should you need it. Think of it as a safety net that can supplement your existing retirement and income plans! 

Anyone can benefit from Medicaid planning. If you are on a fixed income, or are in the middle-class, or have accumulated greater wealth, Medicaid can protect what you have worked hard to build.

#4: You Need To Get An Early Start

The sooner you start planning for Medicaid, the better. Most Medicaid planning professionals recommend beginning the process at least five years in advance, because Medicaid has a 5 year “look back” period, where they consider all assets that you gifted or transferred to count towards your resource limit and eligibility. 

This means, for example, that if you are hurt in a fall, and need nursing home care, you can’t just give everything you have to your children and apply for aid. You likely won’t be able to qualify right then because of the look-back period (and because applying takes a while!). By beginning the Medicaid qualification plans as soon as possible, you allow yourself enough time to gather the right documentation, restructure your assets, and move through the application and qualification process. 

#5: How An Elder Law/Medicaid Planning Attorney Can Help You With Medicaid Planning

Navigating Medicaid planning can be remarkably complicated, as shielding assets from Medicaid requirements necessitates extensive legal knowledge and time. But you don’t have to do it alone, and you shouldn’t – any mistakes made along the way can jeopardize your coverage. An experienced elder law attorney who focuses on Medicaid planning can…

  • Explain how the process works and what your legal options are
  • Answer your questions about Medicaid’s role in long-term care
  • Take the time to get an accurate picture of your financial situation
  • Gather the right documentation
  • Create trusts and use other Medicaid planning to restructure assets, transfer income, and otherwise protect your eligibility
  • Handle the paperwork related to the application process for you, when the time comes
  • Handle the appeals process for you if necessary
  • Advise you as to other aspects of estate planning or long-term care, such as helping you make an advance directive detailing your wishes for medical care or giving someone the power to make medical decisions on your behalf
  • And more.  

Because every person’s life and finances are unique, you need to work with a law firm who will customize your Medicaid planning experience to your unique needs. Having an attorney you can trust helps you to be prepared for whatever the future holds!

Daly Law Offices Is Here For You.The final decades of your life should be spent enjoying the fruits of your hard labor, traveling, and relaxing with your loved ones – not stressing over how to pay for long-term care. Attorney Joshua N. Daly has spent over 14 years guiding adults in Pennsylvania through the Medicaid planning process so that they don’t have to worry about anything. Call Daly Law Offices today to book a free consultation, learn more, and take your next steps!

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