Planning for long-term care is a vital component to proper estate planning, particularly if an individual or couple is anticipating financial hardship as a result of an extended stay in a nursing home. One of the most important distinctions between the Medicare and Medicaid programs is that while the latter provides coverage for long-term care, the former does not. Also important to note is that Medicaid eligibility is dependent upon financial need, and applicants must be able to show a lack of sufficient assets to cover the staggering costs of long-term care.
When it comes to Medicaid planning, the term “spend down” is used frequently to describe the process through which applicants intentionally divest their assets to qualify for coverage. However, this process is highly regulated, and applicants could face significant penalties if assets are not properly divested in accordance with state and federal guidelines. Currently, the following asset and income threshold are in place in Indiana:
To prepare for Medicaid eligibility, there are a number of divestment strategies to consider – particularly if an applicant does not anticipate needing long-term care for several years to come. Currently, transfers of assets and wealth that occur outside the five-year ‘look-back’ period are generally not subject to a penalty. When planning for long-term care, many consider the option of an irrevocable trust in which to transfer assets, as this is one of the safest ways to insulate assets from creditors and the like. However, there are a number of options available to those considering long-term care planning, and each individual or couple will require a unique approach.
With more and more Indianans requiring long-term care services, the Indiana Legislature ultimately opted to eliminate many of the costly and time-consuming spend-down rules formerly required of Medicaid applicants. If you need assistance planning for long term care, you should consult with a qualified elder care and estate planning attorney.