You worked hard throughout your life to pay off your mortgage and build savings for retirement. You expect to live off these savings in the comfort of your own home, and you plan to leave assets to your children after you die. Suddenly, the unthinkable happens—you become ill and are forced to spend the rest of your life in a nursing home. While no one wants to end up in a nursing home, statistics show that about 4 out of every 10 individuals will spend some amount of time in a nursing home which costs on average of $60,000 per year. How can you preserve your assets and life savings? Begin planning early.
The best time to plan for the possibility of nursing home care is when you are still healthy. By doing so, you may be able to have your long-term care costs paid for and also protect your assets for your loved ones. This planning is commonly referred to as Medicaid planning. Even if you have not planned ahead, and depending on the individual circumstances, a person who must enter a nursing home may be able to still protect most, if not all, of their assets.
Mr. Nichelson is an experienced Medicaid planning attorney who will assist with the Medicaid application and hearing, and also develop strategies to rearrange finances and legally shelter assets so that they do not have to be spent to pay for your nursing home care. These strategies, and the Medicaid rules themselves, can be complicated, which is why having an attorney who understands these laws is critical.
An item to be aware of is the law in Medicaid commonly referred to as the “look-back rule.” Medicaid will look-back at any transfer of assets someone has made in previous years. As of November 1, 2011, the look-back period is 60 months. If assets have been given away during the look-back period before applying for Medicaid, a person will likely be ineligible to receive Medicaid coverage for some period of time.
It is also important to understand that as of 2015, the IRS gifting rule states that a person is able to make an annual $14,000 gift to individuals without it being reported to the IRS and without it affecting Federal Estate and Gift Taxes. However, Medicaid rules state that ANY gifting done within the look-back period must be reported on a Medicaid application and the gifts will result in a penalty period. This is something to consider when doing Medicaid and nursing home planning.