The significant cost of long-term care might be on the minds of many people. Whether this need will arise sooner or later, it’s possible to prepare for the possibility of an extended stay in a nursing facility. Although this kind of care might simply become necessary, receiving adequate care is going to create a financial burden.
In order to receive quality care and preserve assets for loved ones, a person might set up a trust or other estate planning instruments to transfer ownership of property. Under this arrangement, a person might be able to have long-term care expenses supplemented by Medicaid. At the same time, transferring ownership of assets can help prevent them from being drained by long-term care expenses.
One thing to keep in mind, however, is that Michigan law calls for estate recovery in some situations. This means that the state could recoup the costs of long-term care services from someone who used Medicaid to cover expenses. Without an understanding of what this means, beneficiaries or executors could be taken off guard by a significant expense for the estate.
On a very basic level, estate recovery applies to those who are age 55 or older and have received Medicaid benefits for long-term care on or after Sept. 30, 2007. In other words, this applies to many of the people who will receive care from this point forward.
Although estate recovery applies to a broad audience, the Michigan Department of Community Health outlines some exceptions. Simply put, the state will put off recovering assets from the estate if the person who received long-term care is survived by:
- A spouse.
- A child under the age of 21.
- A child who is living with a permanent disability.
Beyond these familial exemptions, recovery will be also be deferred if the action will cause significant financial injury to the family.
Of course, estate recovery is just one more thing to consider when dealing with something complex like long-term care planning. Taking proactive measures can help make sure care is provided and beneficiaries don't lose out.
Source: Michigan Department of Community Health, "What is Estate Recovery?" accessed April 1, 2014