For some people, the last months before they retire are the first time they ever think about estate planning. Others who already have basic estate plans go over their documents and make major adjustments.
Proper planning prior to retirement helps people understand what resources they have available and implement plans that can protect them as they age. One of the most important aspects of that process involves preparing for the likely expenses of long-term care.
Older adults often need support to handle medical needs and day-to-day living responsibilities. Some people have home health aides who come visit them regularly. Others may eventually move into a nursing home. Either option usually costs thousands of dollars per month. People preparing for retirement usually need to plan carefully so that they have the financial resources they need to cover those costs as they age.
Medicare doesn’t cover enough
Many retired adults rely on Medicare for health expenses. What many people fail to understand is that there are significant limitations to Medicare coverage. Specifically, Medicare does not cover long-term care expenses. Instead, it primarily serves to cover routine, basic medical costs.
People who need more intensive support or who have to stay at a specialized rehabilitation facility cannot usually rely on Medicare to cover those expenses. Instead, they must apply for Medicaid. Medicaid has strict limits for both assets and income when people need coverage.
Applicants generally cannot qualify immediately if they make many last-minute financial adjustments. The state looks back at five years of financial records. Therefore, the most effective Medicaid planning occurs at least sixty months before an individual might need benefits.
Many people only become reliant on others in the late stages of their golden years. Therefore, the months leading up to retirement or the first years of retirement are an ideal time to engage in Medicaid planning.
They can make certain asset protection moves that can help them preserve resources and protect them from a Medicaid penalty. Not only can they count on qualifying for benefits if they need support later, but they have less reason to worry about the state intercepting the inheritance they want to leave or their beneficiaries after they die.
Trusts, ownership transfers and other strategies can make it easier for people to obtain Medicaid when they need it. Planning to qualify for Medicaid long before coverage is necessary can help older adults ensure their comfort as they age. The best time to plan is usually long before an individual’s health starts to decline.
