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The aging population is growing in the US and worldwide. People are living longer than previous generations, which means many of us will require long-term care. It’s estimated that seven out of ten Americans will need long-term care during their lives.

Long-term care can include care in your home, an assisted living facility, or a nursing home. Some seniors can rely on relatives or friends for some care. For those who don’t have that option, health care professionals can provide the long-term care they need. However, the cost of long-term care is increasing annually. You can estimate the cost of long-term care in your area by using Genworth’s Cost of Care Survey.

Paying for Long-Term Care

Paying for long-term care can quickly drain a person’s savings. Many seniors blow through the assets and retirement savings they have spent their lives accumulating before they can qualify for government assistance. One form of government aid available to all eligible Americans is Medicaid.


Medicaid is a federal and state program that helps cover the costs of many medical needs for those with very limited financial resources. Because the financial limit of assets and income is so low, many people are not eligible. To become eligible, you must have less than the maximum allowable assets and income for five years prior to applying for Medicaid. This five-year period is referred to as the lookback period.

Medicaid Gifting Penalty

People often mistakenly think they can give away their assets, then qualify for Medicaid benefits. This is not how it works. The Medicaid office will impose a gifting penalty based on the value of assets transferred during the five years leading up to the application for benefits. The length of the penalty is calculated by dividing the total amount given away by the average monthly cost of nursing home care in the state or locality where the applicant lives. The number of months calculated is the penalty period the applicant must wait before receiving Medicaid benefits. If, for example, a person gives away $100,000 during the five years leading up to their application for Medicaid and the average cost of nursing home care in their state is $10,000 per month, then the penalty period would be 10 months.

There are exceptions to the gifting rule. Under certain circumstances, a person can make gifts to spouses and siblings, children with disabilities, and children who are caregivers living at home for a specified time with the person needing care. The Medicaid rules are complicated, and the consequences for mistakes can be very costly.

Medicaid Planning

There are options to protect assets and still qualify for Medicaid benefits, but they must be weighed with great care. The earlier you start planning, the better your chance of saving your hard-earned assets. Consult with attorneys who are experienced and knowledgeable in Medicaid law. We can help you qualify and apply for Medicaid while preserving your assets for the next generation.

Our law firm is dedicated to informing you of issues affecting seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home care, assisted living care, or nursing home care.

This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. For assistance, please contact our Natchez office at (601) 445-5011.

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