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Why Long-Term Care Planning is Important 

Stern & Mauck, LLC. Oct. 18, 2022

Long-term care planning can be a crucial part of any estate plan. Many individuals wrongly assume Medicare will cover the costs of their long-term care if they needed to move into a nursing home. However, outside a few limited exceptions, neither Medicare nor any private health insurance policies will cover the costs of long-term care. Due to this fact, many retirees may go broke in a nursing home without help.  

While Medicare does not cover the cost of long-term care, another federal program can. Medicaid is a joint healthcare program run between the federal government and the state that will pay for long-term care under certain circumstances. Each state is responsible for determining their own eligibility standards, but generally speaking eligibility is based on a person's income and available assets.  

When applying for Medicaid, there are certain assets the state considers exempt and do not count when calculating your total assets. A few of the most common exempt assets include the couple’s primary residence, one motor vehicle, medical equipment, jewelry, and household goods and furnishings. However, countable assets such as the couple’s checking and savings accounts and mutual funds count towards the total amount of assets which need to be spent down to the Medicaid eligibility limit. 

Unfortunately, the application process for Medicaid benefits can be complex and utterly overwhelming, particularly for married couples. Mistakes can be especially costly, as they may delay the issuance of benefits or even disqualify a person altogether. In addition, the improper transfer of assets or gifts prior to applying for benefits could also lead to a delay or disqualification of benefits. 

The best time to plan for Medicaid eligibility is when you are healthy and do not foresee the need to receive Medicaid benefits soon. This is because Medicaid eligibility rules include a five-year look-back period. Assets transferred or given away as a gift during the look-back period are still considered countable assets for the Medicaid applicant. This means individuals and couples who plan for the need for long-term care while they are healthy are able to maximize their asset protection. 

Working with an estate planning lawyer who is experienced in handling Medicaid planning is crucial to ensuring Medicaid eligibility. At Stern & Mauck, LLC, our lawyers are knowledgeable in all Medicaid and estate planning laws. Please contact our office for more information or to set an appointment to discuss long-term care planning.