With the US population aging, life expectancy increasing, and events like the Covid-19 pandemic showing us that no one’s health is secure, new awareness has arrived concerning the need for a long-term care plan. This is great news and yet with increased awareness comes an increase in the circulation of misinformation. In a bid to clear the air, we address four of the most common misconceptions concerning long-term care planning below.
1. If you or your spouse enters a nursing home, the state will seize your assets.
Medicaid, the state and federal government-sponsored program that millions of US adults rely on to pay for long-term care needs, seizes nothing when you enter a nursing home. Instead, the program simply will not chip in a dime until you, yourself, have spent down your “countable” assets to a level that qualifies you for assistance. This does not mean only very low-income individuals are eligible to receive Medicaid, however; it simply means that you need to work with an experienced estate planning attorney well ahead of time to put a plan in place to protect assets so that you are able to qualify for Medicaid more quickly when the time comes.
2. If you use Medicaid to pay for care, you risk losing your home.
This misconception is similar to the above but deserves a separate address because of how often it is repeated.
As long as the person using Medicaid (the beneficiary) or their spouse continues to live in their home, it can neither be taken nor forcibly sold. This is the case even if you are single as long as you communicate your “intent to return home” in writing when you enter a nursing home.
It is true that upon your death, the state can file a claim against your estate (which includes your home) in order to repay nursing home expenses covered by Medicaid but even this can be avoided with help from an experienced attorney.
3. Making a financial gift disqualifies you from Medicaid for five years.
Medicaid employs a look-back period wherein any financial transfers or gifts made in the five years prior to applying for the program may be counted against your eligibility. This does not mean you will be barred from receiving benefits if you make a gift during this period. However, it does mean that you may have to endure a penalty period before Medicaid picks up the cost of your care.
This penalty is based on the value of the gifted assets made and how many days of long-term care they could have been used to pay for. Once more, an experienced estate planning attorney can help you work out specifics and determine the most affordable way for you to gain the coverage you need.
4. It is too late to start long-term care planning.
All too often, folks who are already receiving nursing home care or those with imminent need assume it is too late to engage in planning that preserves their assets. This is simply never true. You can always, for instance, use cash to pay down your mortgage and thereby convert a non-exempt asset into an exempt asset and thus save thousands. While it is always better to begin planning early, such last-minute strategies help you retain a large percentage of all that you have worked so hard to gain.
To learn more about long-term care planning or emergency strategies to ensure you have the coverage you need, do not hesitate to call Miller Estate and Elder Law at (256)251-2137 or reach out via the contact form on our website.