Your Family Matters

When would I need to think about Medicaid planning?

On Behalf of | Jun 7, 2022 | Estate Planning

Many people in the Springfield area might worry about how they are going to afford a stay in an assisted-living facility should they need one.

The costs for a nursing home stay vary, but these facilities can easily charge close to $10,000 per month for a stay. For most Illinois residents, long-term care insurance and personal savings can only go so far in meeting these costs.

They may have to face the reality of either having to spend what they had hoped to pass down to family members or not getting the care they need.

This financial squeeze is one reason why people engage in Medicaid planning as part of their overall financial and estate planning.

Medicaid will cover nursing home stays.

As a federal program for those who do not have the means to pay for their own medical care, a person has to meet strict income and asset requirements to qualify for it.

While early planned gifting can be a way to navigate around these requirements, people should be extremely careful about just passing off their property in order to qualify for Medicaid.

The reason is a look-back penalty, which applies to gifts and other transfers made within 5 years before applying for Medicaid. If a penalty applies, a person may qualify for Medicaid but be responsible for their own nursing home bills for a number of months. The time in which Medicaid refuses to pay nursing home bills is the penalty period.

There are many other effective Medicaid planning techniques

Not every transfer is subject to a penalty. For example, if a senior needs help with household chores and basic personal care, they can enter a Personal Care Agreement with a trusted relative.

The Agreement sets out what services the relative will provide. The senior, in turn, may pay reasonable compensation to the relative without having to worry about a Medicaid penalty.

An experienced estate planning professional may also be able to help a Springfield resident explore other Medicaid planning options.