You worked and saved all of your life. You followed your parents’ advice and are in a better financial position at your age than they were when they were your age. Simply put, you are finally comfortable. You now watch as loved ones or their families begin to suffer illnesses leading to the often difficult decision of placing that loved one in a long-term care facility. You listen in horror as they detail the woes of having to use all of their loved one’s assets to pay for that person’s care. Is there anything you can do now to avoid putting your own family or loved ones through this in the future?
The answer is yes, but only if you plan ahead. Too often, we’re contacted by misinformed or misled clients. They were told to start giving their assets to their family now. After all, “you want to see your son or daughter experience this gift that you gave them”. This is simply bad advice.
Medicaid is the single largest source of coverage for long-term care in the country. Should you need it, there is a look-back period. Since the passage of the Deficit Reduction Act of 2005, that period is 5 years. If you need care in a long-term care facility and are without resources to cover it, the state will review your financial history for the past five years to determine if you made any improper transfers. If they determine that you did, you’llbe ineligible for help, even if you are otherwise without money to pay for your care, for a period of time called the “restricted coverage period”. This means that gift to your son may disqualify you from Medicaid coverage.
As an example, let’s say you followed your friend or financial advisor’s advice and gave your son $200,000.00. It’s been less than five years and you need care in a nursing home and but for this gift, would otherwise qualify for Medicaid. Since that gift was made within the five years prior to your going into the facility and applying for Medicaid, the state would determine the period of time (restricted coverage period) that you would have to pay privately before Medicaid would cover your care. The State would divide your gift by Ohio’s average private pay rate of $6,327.00 resulting in over 31 months that you or your family would have to come up with resources to cover your care.
These problems can be avoided. With proper advice and planning through capable elder law attorneys like those at AlerStallings, you can save your assets, reduce or eliminate any restricted coverage period and assuring that your future long term care needs can be met. If you would like to learn, please contact an AlerStallings office today to schedule a consultation.