Part of growing older is thinking about the future. Health issues that were once far-off possibilities may soon become pressing realities. For many aging Americans, those health issues may require a stay in a nursing home or intermediate care facility.
It's no secret that the financial toll of such stays can be staggering. On average, nursing home care costs nearly $7,000 per month, according to the U.S. Department of Health and Human Services. A long-term stay could quickly wipe away your life savings.
You don't have to give up your life savings
So how do you protect the assets you've worked so hard to build while still ensuring that you get the proper care?
For many, Medicaid is an answer. This federal-state program - called SoonerCare in Oklahoma - is the largest payer of nursing home expenses. To qualify, though, you must meet income and asset limits.
Strategies for qualifying
Medicaid won't do you much good if you have to drain your life savings just to qualify. Fortunately, there are ways to become eligible without depleting your resources.
Only certain assets are counted for purposes of Medicaid eligibility. Through careful planning, you can funnel your wealth into assets that won't count against you. Effective strategies may include:
- Planning an annual gifting schedule to transfer assets to your heirs
- Establishing an irrevocable trust to provide for your family members or other beneficiaries
- Investing in certain types of annuities
- Paying off your home mortgage or putting money into other exempt assets
Watch out for this potential wrench in your plans
These strategies can backfire if you're not careful. The law establishes a look-back period of 36 months (or 60 months, in some instances) from the date you apply for Medicaid. Certain property transfers within this time frame can make you ineligible for a period of time - which could be lengthy.
The best way to avoid this and other pitfalls is to work with an attorney who understands Medicaid planning.