When your parents get older and need more care, you likely will begin investigating how much it costs to live in an assisted-living facility or nursing home in New York. Very quickly, you’ll realize your parents’ nest egg may not cover the high costs. A month in a nursing home can cost up to $18,000 in New York. Assisted-living facilities often charge more than $5,000 a month in New York City and Long Island.
That’s why many families need to plan ahead for elder care costs. This includes how your parents might need to spend down their assets or give them away well before they need more care. That’s because to qualify for Medicare, they want to avoid any penalties from violating Medicare’s lookback period.
What to know about the lookback period
In New York, and 49 other states, the lookback period to qualify for Medicaid is five years. All of your parents’ financial transactions for the past five years are reviewed when they apply for Medicaid.
If they gave you $30,000 for a down payment on a house four years ago, that will impact when they can qualify for Medicaid. So, if the average nursing home monthly cost is $10,000 in New York, your parents will need to wait three months before they can qualify for Medicare for violating the lookback period.
Estate planning to avoid lookback period violations
Working with your parents and an estate planning attorney as they age can help them avoid violating Medicaid’s lookback period. They may decide to establish an irrevocable trust, to protect your inheritance. They may decide to give you a portion of your inheritance over the next few years, so you get it before it’s wiped out because they need additional care later.
Having conversations about your parents’ estate planning aren’t always easy to start. Yet you want to ensure they understand how much planning ahead can help them in the long-term.