A Medicaid Asset Protection Trust Could Be Your Best Solution For Future Nursing Home Costs

One of the primary concerns of many senior citizens is passing along their assets to their children and grandchildren. They are aware that a serious illness can rapidly deplete a lifetime of savings and threaten their home. In the past, older couples would sometimes get divorced in a last-ditch effort to save something for the well spouse.

Nursing home costs have skyrocketed, with Wisconsin’s costs being higher than the U.S. median costs. An assisted living facility can be expected to cost well over $42,000 per year. Expect to pay about $100,000 a year for a private room in a nursing home. Long term care insurance covers a percentage of nursing home costs, but the majority of seniors do not have this coverage.

Medicare Doesn’t Cover Long-Term Nursing Home Care

Medicare will not pay for a lengthy stay in a nursing home, although it will cover brief stays, such as for rehabilitation after a serious illness or surgery. Health insurance policies either have a similar policy or do not cover nursing home care at all. While some people are in a position to pay for an extended care in a nursing home (one or more years), most people would find it extremely difficult or impossible to do so.

The Traditional Approach to Gaining Coverage for Nursing Home Expenses is Risky

Traditionally, parents would impoverish themselves by “gifting” their assets to their children in order to become eligible for Medicaid and thus have their nursing home care costs covered. Although the intent was to have those assets used for the benefit of the parents, that could prove to be a risky choice. Their adult children’s debts, divorces, accidents and other crises could divert those assets away from the parents.

A Trust Will Protect Your Assets More Effectively

It’s important to understand that there is a waiting period before asset protection trusts can take effect, so it’s important to establish a Medicaid Asset Protection Trust before it is needed, if at all possible. The purpose of the trust is to protect valuable assets and, after the waiting period, allow the parent(s) to become eligible for Medicaid benefits, particularly nursing home coverage. The parent retains control of certain aspects of the trust; they can change the trustee or beneficiaries or appoint a trust protector.

For Medicaid purposes, the assets contained within the trust are not counted; they will not prevent Medicaid eligibility. Also, when the parents die, the trust assets will be distributed to family members and are not subject to either probate or collection/repossession by Medicaid.

Medicaid rules are complex. If you’re concerned about the impact of nursing home costs, we will be pleased to discuss your situation and review your available options. At Horn & Johnsen SC, we believe in taking the time to learn about you and your family. If a Medicaid asset protection trust would be the best solution for you, we’ll design a trust that will reflect your needs and desires.

One of the primary concerns of many senior citizens is passing along their assets to their children and grandchildren. They are aware that a serious illness can rapidly deplete a lifetime of savings and threaten their home. In the past, older couples would sometimes get divorced in a last-ditch effort to save something for the well spouse.

Nursing home costs have skyrocketed, with Wisconsin’s costs being higher than the U.S. median costs. An assisted living facility can be expected to cost well over $42,000 per year. Expect to pay about $100,000 a year for a private room in a nursing home. Long term care insurance covers a percentage of nursing home costs, but the majority of seniors do not have this coverage.

Medicare Doesn’t Cover Long-Term Nursing Home Care

Medicare will not pay for a lengthy stay in a nursing home, although it will cover brief stays, such as for rehabilitation after a serious illness or surgery. Health insurance policies either have a similar policy or do not cover nursing home care at all. While some people are in a position to pay for an extended care in a nursing home (one or more years), most people would find it extremely difficult or impossible to do so.

The Traditional Approach to Gaining Coverage for Nursing Home Expenses is Risky

Traditionally, parents would impoverish themselves by “gifting” their assets to their children in order to become eligible for Medicaid and thus have their nursing home care costs covered. Although the intent was to have those assets used for the benefit of the parents, that could prove to be a risky choice. Their adult children’s debts, divorces, accidents and other crises could divert those assets away from the parents.

A Trust Will Protect Your Assets More Effectively

It’s important to understand that there is a waiting period before asset protection trusts can take effect, so it’s important to establish a Medicaid Asset Protection Trust before it is needed, if at all possible. The purpose of the trust is to protect valuable assets and, after the waiting period, allow the parent(s) to become eligible for Medicaid benefits, particularly nursing home coverage. The parent retains control of certain aspects of the trust; they can change the trustee or beneficiaries or appoint a trust protector.

For Medicaid purposes, the assets contained within the trust are not counted; they will not prevent Medicaid eligibility. Also, when the parents die, the trust assets will be distributed to family members and are not subject to either probate or collection/repossession by Medicaid.

Medicaid rules are complex. If you’re concerned about the impact of nursing home costs, we will be pleased to discuss your situation and review your available options. At Horn & Johnsen SC, we believe in taking the time to learn about you and your family. If a Medicaid asset protection trust would be the best solution for you, we’ll design a trust that will reflect your needs and desires.

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