Medicaid and long-term care planning

On Behalf of | Jun 7, 2024 | Elder And Disability Law |

According to some studies, about 16% of Americans are 65 or older. The average life expectancy of Wisconsin residents is currently just under 80 years. Many Wisconsinites are living much longer than that, and many of them are in relatively good health.

But, generally speaking, the older we get, the greater our chances of developing mobility problems and cognitive issues. When or if we develop these problems, we will require help. In fact, well over 50% of Americans who are currently 65 or older will need long-term care at some point in the future, according to the U.S. Department of Health and Human Services.

And that help is expensive. A private room in a nursing home can cost $108,000 or more per year.

Some Wisconsin residents have insurance that can help them pay for long-term care, but many do not. And many insured people find that their policies aren’t sufficient to pay for everything.

Others arrange to pay for their long-term care through an estate planning tool known as a Medicaid trust.

Medicaid eligibility

Two of the largest federal health care programs are Medicaid and Medicare. Medicaid provides health care benefits for the indigent. Medicare provides health care benefits for seniors.

Medicare generally does not pay for long-term care, but Medicaid does. However, because Medicaid is designed as a program for people of very limited means, one must go through a means test in order to be considered eligible for the program. If a person has more than a certain amount in income and assets, they are ineligible.

The cutoff is quite low. A person living in a single-person household can become ineligible for Wisconsin Medicaid if they have annual income of just $21,000.

Medicaid trusts

One way to maintain eligibility for Medicaid is to put one’s assets in a trust. If done correctly, this means the assets are owned by the trust and won’t put the person over the threshold that makes them ineligible for Medicaid.

By using this type of trust, a person can have Medicaid pay for their long-term care and still pass on assets to their loved ones.

Note that Medicaid trusts are technically and legally challenging. Those who are interested in pursuing this strategy should seek out experienced help. They should also get started well in advance of when they expect to need long-term care.