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Planning for long-term care with trusts

On Behalf of | May 29, 2023 | Estate Planning & Elder Law

A common misconception has it that estate planning is entirely focused on what happens to your property after you die. In fact, estate planning can be extremely important in protecting you and your property for the rest of your life.

One example of this involves planning for Medicaid and long-term care.

Medicaid and Medicare

Medicaid and Medicare are two federal programs that help people pay for their medical needs as they get older.

Most Americans age 65 and older are eligible for Medicare, and can rely on the program to help them pay for most of their medical expenses.

Medicaid can pay for some of what Medicare does, and for some needs that Medicare does not cover. Importantly, Medicaid can cover long-term care; Medicare does not.

However, eligibility for Medicaid requires a means test. If you have more than a specified amount in income and assets, you are ineligible for Medicaid.

The problem of long-term care

This situation causes a problem for many families when one of their loved ones requires long-term care. This happens more often than many people might think, and it costs a lot more than they may be prepared for.

The U.S. Department of Health and Human Services says that 70% of Americans age 65 and older will need long-term care at some point in their lives. The average length of time a person needs long-term care is three years, but as many as 20% of older people will need long-term care for five years or more.

Long-term care costs can top six figures per year. Unfortunately, many Americans are unprepared to pay for these costs. They desperately need the help of Medicaid.

Maintaining eligibility

Unfortunately, in order to pass the means test for Medicaid eligibility, you may have to rid yourself of your assets. This can create a lot of problems for your family. Not the least of these problems is that it means you will be unable to provide for your loved ones after you are gone.

Estate planning attorneys help families get around this problem by creating Medicaid planning trusts. By moving your assets into a trust, you can maintain your eligibility for Medicaid and also ensure that the trust provides for your loved ones long into the future.