Protect assets from Medicaid with a Central Kentucky estate planning lawyer's helpWhile lower than the national average, nursing homes in Kentucky still cost almost $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. You can protect your assets and also qualify for Medicaid in Kentucky.

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, they do not look at your spouse’s assets for eligibility. What’s theirs is theirs, and what’s yours is yours. If assets are held in a joint account, they belong to both of you.

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. Again, it is smart to speak with a Kentucky estate planning lawyer for the benefits and drawbacks of any estate plan.

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. You can get it as an individual policy, a group policy from your employer, a policy from a government agency, 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.

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.

Medicaid Asset Protection Trusts and the Lookback Period

One of the most robust ways to protect your assets is a Medicaid Asset Protection Trust (MAPT). It is an income-only trust. Under a MAPT, you assign a trustee to manage the assets. As the Medicaid applicant, you only get the income. This removes the asset from your countable assets since the trust now owns the property, not you. When you pass away, the property passes to your beneficiaries as normal. Assets held within a MAPT are exempt from Medicaid eligibility rules.

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 your assets. This could include your house. When you pass away, the State may seek to recover what it paid you 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. 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 Medicaid Asset Protection Trusts, is a worthwhile exercise. Good planning goes a long way.

It’s always a good idea to work with an attorney. The team at Skeeters, Bennett, Wilson & Humphrey are here to serve you. 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.