No one enjoys contemplating the end of their life or health as they age. The avoidance of this unpleasant reality is one reason that people give for failing to adequately plan for their needs as they get older.
Many people put off creating an estate plan or last will for far too long, leaving themselves and their loved ones vulnerable if something unexpected happens. Another mistake that people make far too often is the decision to avoid planning for the potential of health issues as they age.
Not addressing the potential need for long-term care as early as possible can have catastrophic consequences for the inheritance you hope to leave behind for the people you love. The sooner you initiate planning for long-term care, the better the end result will be for everyone.
Younger adults can qualify for long-term care insurance
Most working adults either have their own health insurance or a plan they purchased through their employer. When they retire, they can continue to carry the same coverage or may intend to use Medicare benefits. Not everyone truly understands Medicare's limitations for the care of older adults.
There are major gaps in Medicare, especially when it comes to things such as long-term care. Medicare will not cover the cost of nursing home stays or in-house nursing services. Individuals will either need to pay for that kind of care out-of-pocket, with Medicaid or long-term care insurance.
Because long-term care is so expensive, the policies that offer this kind of coverage are often cost-prohibitive for adults even as young as their mid-forties. The earlier in your working life you secure long-term care insurance, the better the rate you will pay. If you are not able to afford that coverage now, then you should start planning for the potential need to qualify for Medicaid.
Medicaid planning requires careful consideration and foresight
The government doesn't want to pay for medical care if they can instead demand that individuals liquidate their assets to pay for care. The federal government will look back at financial statements from applicants for five years prior to the date of application. Any significant transfers or gifts during that time will likely incur a significant penalty. An individual may have to pay that amount in medical care before Medicaid will cover them.
Obviously, taking steps to shelter or transfer your assets earlier in retirement is a wise choice. Some individuals use a trust, which can provide them with secure access to their assets without precluding their ability to qualify for Medicaid. Others may begin making gifts of assets to their heirs and family members annually. After a certain number of years, they can reduce their personal assets to the point where they can qualify for Medicaid without penalties in the future.
Talking with an attorney who has experience planning estates and helping people plan for long-term care and Medicaid is a good first step toward developing a plan for funding long-term care in your future.