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Medicaid Planning

Updated: Nov 27, 2023

A recent article shows how baby boomers are a huge generation. By 2030, the US will,

discussing medicaid plan

for the first time, have more residents over 65 than children. Someone turning 65 today has a 70 percent chance of needing long-term care at some point, and 20 percent will need it for more than five years. Boomers are also living longer — life expectancy increased from 68 years in 1950 to about 76 years in 2021 — but are still vulnerable to conditions like Alzheimer’s disease, meaning they will need care for more years than previous generations.

It is critical to plan for this stage of life for yourself and for your parents. Distinguish between Medicare and Medicaid. Medicare is our medical insurance of sorts. Medicare does not pay for long-term care. Long-term care is what someone needs either at home with a home care aide, assisted living, skilled nursing facility, or nursing home.

  • The first step is to prepare by ensuring you have up-to-date medical directives like a living will, health care surrogate designation, and a durable power of attorney. These documents will allow your family to care for you during a time of either temporary or permanent incapacity.

  • The second step is planning your finances. Protect your savings with an irrevocable trust for Medicaid purposes. This is a trust where you can place all or most of your savings, and they are fully protected for Medicaid purposes after five years. That means that after five years of creating your irrevocable trust and funding it, it doesn’t matter how much money you have in that trust; you will still qualify for Medicaid. That’s a HUGE benefit that cannot be overstated.

Paying for professional care out of pocket can be catastrophically expensive — the median annual cost of a full-time home health aide was nearly $60,000+ in 2021, while a semi-private room in a nursing home ran $94,000+ per year. Those costs are out of reach for most boomers, more than 40 percent of whom have no retirement savings. That leaves family members to provide care themselves and deal with mounting bills.

Planning for long-term care is a gift not only for yourself but also for your family, who usually bear the financial, physical, and emotional burden of caring for ailing relative while also working and caring for their immediate family.

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