Here’s why you need to start nursing home planning now

On Behalf of | Mar 10, 2022 | elder law

There are more than 15,000 nursing homes across our county. These businesses serve a high need, too. In fact, some studies show that individuals who are 65 years old or older have about a 70% chance of needing some type of long-term care. This means that there are hundreds of thousands of Americans in nursing homes and other long-term care facilities, and that there’s a strong likelihood that you may need that care at some point in the future, too.

You may be thinking that a potential nursing home stay is a long way away, and that your insurance will cover it when the time comes, but the sad reality is that many people who end up in a nursing home don’t have adequate health insurance coverage to pay for their nursing home-related expenses. As a result, they are often left to pay the remaining balance out of their own pockets. This can quickly eat into savings, which can prevent you from leaving your assets to your loved ones. In some instances, these extraordinary bills can also prevent an individual from receiving the long-term care that he or she needs.

How nursing home planning works

While some people may set money aside in savings to help pay for a potential nursing home stay, this isn’t necessarily the most effective strategy. A better option may be to gift assets to loved ones so that you reduce your net worth and your income in a way that allows you to qualify for Medicaid.

Medicaid is a great coverage option for you because it likely will pay for the full extent of your nursing home stay, should you need one. So, in other words, by engaging in effective planning, you can protect your assets so that your loved ones can enjoy the financial stability that those assets provide, and you can obtain the healthcare coverage that you need to ensure that you receive necessary care.

How do you gift assets so that you qualify for Medicaid?

The important thing to remember here is that transferring assets to a loved one, while perhaps being a tax free process, can have implications on your Medicaid eligibility. This is because the government will oftentimes delay your eligibility period for a certain period of time based on the gifts that you have given to obtain eligibility. Keep in mind, too, that even seemingly minor transfers of property and gifts given for holidays and birthdays can be counted against you.

So, what are you to do? Well, the federal government won’t penalize you for transferring your property to your spouse, so that’s certainly an option. Another route that you can take, though, is creating a trust for a disabled child. You also might be able to transfer ownership of your home to a child who is under the age of 21, a child who has been providing care for you in the two years leading up to a nursing home stay, or a sibling who was already residing in the home and has an equity interest in it. There may be other options at your disposal, too, which you should thoroughly discuss with your attorney.

Know how to properly plan for your future

There are certainly a lot of nuances when it comes to Medicaid planning. But if you make even one seemingly minor misstep, then you, your loved ones, and your estate could end up facing serious financial ramifications. That’s why if you’re interested in figuring out how to effectively plan for your future care, then now may be the time to discuss your circumstances with an experienced elder law professional.