While lower than the national average, nursing homes in Kentucky still often cost over $8,000 per month. That’s nearly $100,000 a year. As part of your estate planning, it’s important to consider long-term care costs.
Medicaid can help cover nursing home costs for eligible people, but it takes careful planning to avoid depleting your assets in retirement. For sound estate planning advice, speak with an experienced Central Kentucky estate planning attorney at Skeeters, Bennett, Wilson & Humphrey.
Plan Ahead for Long-Term Nursing Care Costs
First and foremost, make a plan. Your estate planning lawyer is a valuable asset. They can explain your options and guide you through the whole process. Don’t leave this to the last minute. The further in advance you can plan for long-term care costs, the better.
This will give you time. You can then take steps to protect your assets. It might also mean deciding how you manage your assets. When qualifying for Medicaid, state agencies consider the assets of married couples as a single unit. It does not matter whether the spouses have separately titled property. All assets are part of the resource calculations to determine if one of the spouses will qualify.
As you look ahead to your retirement years, you may think about gifting some assets to your adult children. If the gift is structured correctly, this can also help to protect your assets. On the other hand, an improperly structured gift can have disastrous tax consequences. Again, it is smart to speak with a Kentucky estate planning attorney for the benefits and drawbacks of any estate plan. Many clients also ask, “can medicaid take my home in Kentucky?” — understanding this is vital to effective asset protection and long-term care planning.
Consider Buying Long-Term Care Insurance
One option you might consider is long-term care insurance. It works in much the same way as other forms of insurance. You pay monthly premiums for a period of time. When you need to move into a nursing home, you file a claim with the insurer. They can either pay you or the long-term care facility directly.
You can buy long-term care insurance from many sources. There are many different types of policies. You can get it as an individual policy, a group policy from your employer, or a policy from a continuing care community. Long-term care insurance can be a part of a life insurance policy too.
Premiums can vary considerably. They’ll usually be higher as you get older or if you are not healthy.
You may need to pay premiums indefinitely. Or, you might “buy out” a policy after a set number of years. This is another example where the expertise of a knowledgeable Central Kentucky estate planning lawyer is invaluable.
Qualify for Medicaid Long-Term Care Assistance
Medicaid in Kentucky can help cover the costs of long-term care in a nursing home. To qualify for Medicaid, you must meet certain eligibility rules.
- Resident of Kentucky
- U.S. citizen (or qualified non-citizen)
- At least 65 years old
- Have a medical condition to qualify for long-term care
- Income of no more than $2,742 per month
- Countable assets of no more than $2,000
Keeping your countable assets under $2,000 may seem tough. But, there are ways to qualify for Medicaid despite this rule. Several noncountable assets are exempt from this amount. Examples include personal possessions, one motor vehicle, and your IRA savings. A primary residence with under $688,000 in equity is also noncountable, but only under certain cicumstances.
Medicaid Asset Protection Trusts and the Lookback Period
One of the best ways to protect your assets is a Medicaid Asset Protection Trust (MAPT). Under a MAPT, you assign a trustee to manage the assets transferred to your trust. The trust owns the assets. Income can be paid to you from the trust, but your access to principal is restricted. Once the assets are in the trust for five years, they are no longer a countable resource under Medicaid's rules, meaning the assets do not have to be used to pay your nursing home costs and allowing you to qualify for Medicaid sooner. When you pass away, the property passes to your beneficiaries as stated in the trust.
It’s important to note that Medicaid applicants in Kentucky are subject to a five-year lookback period. Any gifts given during this period are subject to a penalty. They affect your Medicaid eligibility. This includes gifting assets to a spouse or family member. It also includes transferring property to a MAPT. If you need long-term care before the five years have passed, you may not be eligible for full benefits.
Another factor to consider is the Medicaid Estate Recovery Program. Even if you qualify for Medicaid, Kentucky may place a lien on assets in your estate. This could include your house. When you pass away, the State may seek to recover what it paid for your care from your estate. This is another reason why a MAPT can be useful, among other estate planning options.
The Importance of Good Estate Planning
Coming up with the best estate planning strategy is a complex matter. Beware of those who claim everyone needs the same kind of estate plan. You may choose to spend some non-exempt assets to improve an exempt asset. Spending cash on primary home upgrades is one example. Exploring other options, like long-term care insurance and a Medicaid Asset Protection Trust, is a worthwhile exercise.
The team at Skeeters, Bennett, Wilson & Humphrey are here to work with you to determine which options are best for you and your family. Our Central Kentucky estate planning lawyers are well-experienced in Medicaid planning. We can help you create a plan to protect your hard-earned assets and still qualify for assistance with nursing home costs.