When should you apply for Medicaid?

The need for long-term care has been slowly increasing over the years, becoming an issue for the aging. No one wants to think about one day requiring long-term care, but the reality is that Americans are living longer than ever before. According to a study by the U.S. Department of Health and Human Services about 70 percent of Americans 65 and older will require long-term care of some kind. Depending on the level of care that you require, there are many options you can look into including skilled nursing, assisted living, or in-home care. The typical cost of a nursing home is $79,935 per year, for assisted living the cost is generally around $39,516, and for home health aide it’s $21 per hour. As you can see the cost for long-term care can be very expensive and an individual’s life savings can be easily wiped out in a short period of time.

Insurance companies cover standard health care but do not cover the need for long-term care. You can’t rely on Medicare to step in and foot the bill of long-term care. Medicare will only cover the first 100 days of an individual’s rehab stay at a nursing home. Only the first 20 days will be fully covered followed by 80 days of partial payments along with a co-pay. According to Jeffrey Condit, Senior Vice President and AARP Relationship Leader for Genworth Financial, those who are not eligible for Medicaid are encouraged to consider long-term care insurance at the age of 50. One of the main reasons for this is the low cost of premiums for an individual who is middle aged and has good health.

The average cost of long-term care insurance for a healthy 55 year old is $2,007 per year but can range from $1,764 per year to $3,446 per year. This cost goes up exponentially as the insured individual ages, and does not include any other insurance premiums that a person pays for regular health care. This leaves long-term care out of reach for many middle income Americans. Through Medicaid many middle income Americans have access to long-term care choices that would otherwise be unaffordable to them. With the proper knowledge and planning, many individuals can be eligible for Medicaid, it may be a good idea to reach out to a competent Medicaid consultant for guidance.

You should begin to think about the application process for Medicaid five years in advance of anticipated long-term care. This allows for asset preservation prior to the five-year “look back”. Medicaid uses this term to describe the 60 month period where they look to uncover any transfers of assets for less than fair market value and impose a penalty period of ineligibility based on those gifted monies. Individuals with certain illnesses may need to plan earlier than others in case they need long-term care. Some illnesses that may result in an extended nursing home stay include dementia, diabetes, renal failure, some types of Parkinson’s and some forms of cancer.

Once the likelihood of a nursing home is more imminent, for a single person it is generally best to begin thinking about the Medicaid application when one’s assets are down to $100,000. A couple should begin the process no later than when their assets are down to $240,000. This amount give the Medicaid applicant enough time for document gathering and to spend some of their assets on allowable expenses such as pre-paid funerals and other expenditures. This allows for a smooth application process and greater peace of mind for the family. To make sure that the cost of your care does not fall on your loved ones, take the time to be properly informed and educated on Medicaid eligibility guidelines so that you can address any issues you may have.