Our estate planning and elder law offices are located in Mount Clemens, so we are stone’s throw away from Utica, Michigan. This Macomb County city has a long history that dates back to 1829. There is a small town feel since there are only about 5000 residents, but everything that the greater metropolitan area has to offer is within easy reach.
The median age for Utica residents is significantly higher than the national average. There are a good number of senior citizens in town, and many residents that will attain that status in the near future.
People that plan ahead effectively from a financial standpoint can enjoy their retirement years to the fullest. They often travel, enjoy leisure activities, and spend quality time with their family members and friends. Indeed, the golden years can be extremely enjoyable if you have your health and a solid financial underpinning.
This being stated, you should also consider the twilight years that will inevitably follow. Budgeting for the normal bills you would typically face is part of the retirement planning process. But there is a huge, possibly unexpected expense that is looming when you reach the latter portion of your life.
Long-Term Care Costs
Entities that compiles statistics that are relevant to seniors have found that most elders will eventually need help with their activities of daily living. Many will reside in nursing homes eventually, and these facilities are very expensive. In the Utica, Michigan area, the average cost for a year in a nursing home at that time of this writing is right around $100,000.
It may be natural to assume that Medicare would pay for a stay in a nursing home, because it is a program that was created to satisfy the health care needs of senior citizens. Whether if makes sense of not, long-term care is not covered at all. To sum it up, it is likely that you will need living assistance, it is very expensive, and Medicare will not pay for it.
Nursing Home Asset Protection
Medicaid is a jointly administered federal/state government health insurance program that will pay for nursing home care. Of course, you are probably aware of that fact that it is intended for people with very limited financial resources. There is a low asset limit of just $2000, so you may wonder how you can gain eligibility.
The reality is that most seniors in are using nursing homes are using Medicaid to pay for, and most of these people were not financially needy throughout their lives. To qualify for Medicaid to pay for long-term care, you could divest yourself of assets by giving into your loved ones.
Direct gift giving is a possibility, and you could alternately convey resources into an irrevocable Medicaid trust. The trust would be an income-only trust, so you could continue to receive income from earnings that are generated by the assets in the trust before you apply for Medicaid. You would not be able to touch the principal.
These assets would not count if you were to apply for Medicaid to pay for long-term care, and of course, direct gifts would be in the hands of your loved ones. They would no longer be in your name.
All this sounds simple enough on this surface. You could simply give assets your loved ones or fund a trust after you find out that you have to enter a nursing home. Unfortunately, this would be contrary to this spirit of a program, so there is a five year look back period to prevent reactive divestitures. You have to complete all gift giving at least five years before you submit your application.
If you violate this rule, a penalty is imposed, and you cannot gain eligibility for Medicaid for a certain period of time. The interim is based on the amount of the divestitures. For example, if you gave away enough to pay for three years of nursing home care, your eligibility will be delayed for 36 months.
Schedule a Medicaid Planning Consultation!
We are here to help if you are a resident of Utica, Michigan with concerns about long-term care costs. You can send us a message to request a consultation appointment, and we can be reached by phone at 586-493-7661.