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By John R. Merlino Jr. Esq.
Founding Attorney

Most Americans will need long-term care at some point in their lives. Long-term care can be extremely expensive and not something most people will be able to pay for out of pocket. Take these two facts together and you will clearly see the benefit of engaging in long-term care planning. Without proper planning, the cost of long-term care can quickly tear through your assets and life savings. Fortunately, if you take steps now to plan for the future, this can be avoided.

What Is Long-Term Care Planning?

Long-term care planning is planning for how you will cover the cost of long-term care when the need arises. It can be incredibly difficult to plan and save for such a substantial expense and so most people can and should look to other options instead of trying to pay for long-term care directly out of pocket. For instance, some may purchase long-term care insurance. The problem is that long-term care insurance can, in and of itself, be very expensive and not something a person is able to budget for. Furthermore, long-term care insurance may not be available to those individuals with preexisting conditions or in advanced years of age.

Some people operate under the assumption that Medicare will pay for long-term care costs. Medicare only provides very limited coverage for nursing home stays. If you require long-term care, such as extended nursing home stays, Medicare will not provide you with this coverage. Medicaid, on the other hand, will cover the cost of long-term care. Medicaid, however, has strict eligibility requirements. In particular, the assets and income restrictions regarding who can be eligible to receive the need-based government benefits under Medicaid can be a difficult barrier to overcome, particularly for those who have not planned accordingly.

You see, you cannot simply give away your assets and money in order to qualify for Medicaid. Medicaid has a five-year lookback period in which you will be penalized for these sorts of transfers. It is also not necessarily the best plan to go into long-term care and have the costs quickly eat away at your life’s savings before you can qualify for Medicaid. During the long-term care planning process, you can use a variety of legal tools to help you qualify for Medicaid when the time comes. Often, Medicaid trusts are used to accomplish this. With a Medicaid trust, which is a type of irrevocable trust, a person transfers assets to the trust and it is removed from the Medicaid calculation. The trust must be properly structured and executed and the assets must be effectively transferred into the trust to be managed by the trustee.

Estate Planning Attorneys

With proper planning, you can avoid losing your life savings to the cost of long-term care. Time, however, is of the essence. The sooner you begin the important process of long-term care planning, the more options you are likely to have. Do not hesitate to speak with the knowledgeable attorneys at Merlino & Gonzalez. We have answers for you. Contact us today.

About the Author
John is a fierce advocate and the office guru for problem-solving and brainstorming. He guides clients through every stage of a real estate transaction from offer to contract, navigating through nerve-shattering home inspection and title clearance concerns, maintaining constant contact with lenders, conducting the actual closing, and continuing to advise clients with regard to any post-closing concerns.  John brings a practical and fair-minded approach to the process which has earned him the respect of his clients and peers.