The new year is a great time to look toward the future and plan ahead regarding Medicaid and long-term care costs. Here’s what you need to know, and how a bit of foresight now can pay big dividends for your future.
The Importance of Planning for Long-Term Care
Individuals who require long-term care, whether through in-home health services or at an assisted living facility or nursing home, can spend thousands of dollars per month for such care. Long-term care costs can easily exceed the monthly income that an older adult receives through Social Security and other sources, potentially requiring families to liquidate assets to afford care. Government programs such as Medicaid can help with long-term care costs, but most people must undertake careful legal and financial planning to qualify for programs.
Understanding Medicaid and Long-Term Care
Elderly or disabled individuals who require long-term care may turn to MassHealth, Massachusetts’ Medicaid program, for financial assistance to cover the cost. MassHealth can provide long-term care services through a medical institution such as a nursing home or in-home long-term care support through home- and community-based service waivers or the Program of All-Inclusive Care for the Elderly. However, individuals who seek Medicaid benefits to help with the cost of long-term care must meet the program’s asset and income eligibility requirements. For individuals residing in a long-term care facility, 2025 eligibility limits include:
- $1.097 million maximum home equity limits
- $31,584 community spouse minimum resource standard
- $157,920 community spouse maximum resource standard
2024 Eligibility limits for individuals residing in the community include:
- $2,000 asset limit ($3,000 asset limit for couples)
- $2,829 monthly income limit
- $174.70 Medicare Part B premium limit
These 2024 asset and income eligibility limits will likely increase for 2025 to reflect inflationary changes.
Medicaid/Long-Term Care Planning Strategies
Top Medicaid and long-term care planning strategies that individuals and families might pursue for 2025 include:
- Irrevocable trusts: Medicaid planning frequently includes using irrevocable trusts to remove assets from a person’s estate and help them qualify for benefits; trusts can also form part of an estate plan to protect those assets and pass them onto loved ones after death.
- Gifting strategies: Individuals may undertake gifting strategies to get under asset limits for Medicaid eligibility; however, gifting strategies require careful legal guidance to avoid violating lookback rules that may result in penalties.
- Spend-down strategies: Medicaid rules allow benefits applicants to spend otherwise countable assets and income on qualifying medical expenses or annuities.
- Long-term care insurance: Individuals can purchase long-term disability insurance to help defray some of the cost of long-term care.
- Medicaid-compliant annuities: Purchasing annuities that comply with Medicaid rules can help individuals who need long-term care spend assets to get under eligibility caps; annuities can also provide an income stream to assist with long-term care costs or improve quality of life.
Furthermore, Medicaid/long-term care planning should also involve updates to other estate planning strategies, such as wills, powers of attorney, advance care directives, and beneficiary designations, to ensure that estate plans align with long-term care strategies.
Top Considerations for 2025
Some of the critical considerations for 2025 that individuals and families undertaking long-term care planning should keep in mind include:
- Continued inflation: Ongoing inflationary pressures may increase long-term care expenses. Medicaid and estate planning should account for care costs continuing to rise in 2025, with cost increases potentially outpacing rises in Medicaid or other government benefits.
- State-specific considerations: Various states have made differing decisions on whether to expand their Medicaid programs.
- Changes to Medicaid: Incoming changes in administration in the federal government may result in the adoption of new policies for Medicaid that may change the availability of benefits for long-term care.
Contact an Estate Planning Attorney Today
Planning today can go a long way to protecting yourself tomorrow. Contact Surprenant & Beneski, P.C. today for a confidential consultation with an estate planning lawyer to learn how the steps you take in the final weeks of 2024 can help you secure the Medicaid benefits or other financial assistance you need for long-term care costs.
