A lot of people have questions about Medicaid estate recovery in Connecticut, and we are going to answer them in this post. When you fully understand the dynamic, you will recognize the need for nursing home asset protection.
Long-Term Care
In order to grasp the relevance of Medicaid for seniors, you have to digest some facts about living assistance. The United States Department of Health and Human Services tells us that 70 percent of seniors will need long-term care eventually.
Over half of them will require professional assistance, and 35 percent will reside in nursing homes. If these numbers are surprisingly high, you should understand an often overlooked fact about longevity.
The overall life expectancy is 78 years, but that includes people of all ages. As you get older, your anticipated life span rises. For a woman that is celebrating her 67th birthday today, the life expectancy is 87 years. Clearly, many people in this age group will need assistance with their activities of daily living.
Will Medicare Help?
A lot of seniors are lulled into a false sense of security about Medicare. They assume that all major health care expenses will be covered. In reality, Medicare does not pay for a stay in a nursing home. In addition, it does not cover in-home care that is provided by a professional home health aide.
Custodial Care Costs
The median annual charge for a private room in a Hartford area nursing home in 2021 was $13,863 per month. For a home health aide, the figure is just under $6,000 per month. Just over 50 percent of people that need paid long-term care receive the assistance for over a year.
Medicaid Eligibility
Now that you can see the picture clearly, we can narrow the focus on the subject at hand. Medicaid will pay for long-term custodial care. Of course, it is a need-based program, so there is a low $1600 asset limit.
However, some property does not count. A home will fit into this category, and this is by far the most valuable non-countable assets. You can qualify for Medicaid as a homeowner, but there is a good reason to avoid this arrangement.
Medicaid Estate Recovery
There is a Medicaid estate recovery mandate. The program is required to seek reimbursement from the estates of deceased beneficiaries. Because of the low asset limit, there is usually nothing for them to go after, but there is an exception when a homeowner is involved.
If you qualify for Medicaid while you are in direct personal possession of the home, a lien could be placed on the property during the Medicaid estate recovery phase.
Proactive Medicaid Planning
With all of this in mind, you can implement a nursing home asset protection strategy with our assistance. First, you convey your home and income producing assets into an irrevocable trust.
You would not be able to access the principal going forward, but you could accept distributions of the trust’s income. If and when you apply for Medicaid, the assets in the trust would not count as long as you fund the trust at least five years before you submit your application.
Plus, you would no longer own the home if you were to become a Medicaid beneficiary. It would be the property of the trust. As a result, it would be protected during the Medicaid estate recovery process.
Take Action Today!
As you can see, long-term care costs could potentially consume a significant portion of your legacy. In some cases, entire legacies will be consumed by these expenses. Fortunately, with the proper planning, you can maintain your lifestyle as you position your assets with future Medicaid eligibility in mind.
If you are ready to put a nursing home asset protection plan in place, we are here to help. You can send us a message requesting a consultation appointment, and we can be reached by phone at 860-548-1000.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.
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