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Asset protection planning helps plan for how to pay for long term care. The national average cost of a nursing home is over $6,000 per month. Nursing home costs generally exceed the average person’s ability to privately pay, and approximately 60% of nursing home residents use Medicaid to pay for their care. Because of the high cost of long term care, Medicaid planning recognizes that an individual may need at some point to try to qualify for Medicaid to pay for long term care in a nursing home. Medicaid is a needs-based program with its own current and ever-changing requirements. To financially qualify for Medicaid, a person is permitted to have $2,000 in assets and may keep only $40 of income. A person may be penalized for gifts or transfers made for less than fair market value. For each approximately $6,000 gift during the five year period immediately prior to any Medicaid application, Medicaid will impose a one month penalty. There are complicated planning techniques to help put individuals in a better position to qualify when they need long term care in a nursing home. Careful planning can also help to protect the person’s estate, whether to provide for a spouse or for children.

Written by Heather W. Winter, Esquire

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