According to the U.S. government’s Administration on Aging, there is a 70 percent likelihood that individuals age 65 and older will need some sort of long-term care. Despite this staggering statistic, many people fail to plan for long-term care needs.

Often, people assume that Medicare or a health care plan will provide the coverage they need to cover in-home or nursing home care costs. The truth is, Medicare will not cover these expenses and you may find that you not have insurance coverage for nursing home care or in-home skilled nursing services. One way to help cover these costs, is to qualify for Medicaid.

Qualifying for Medicaid depends on income and assets

Medicaid eligibility is based on income. Even if you are retired and live on a fixed income, you may have trouble qualifying for Medicaid as the assets you own and transfer to others can affect your eligibility.

When you apply for Medicaid, the government needs to verify that you do not have sufficient assets to pay for long-term care on your own. As part of this process, you must submit financial records for the last five years. This process helps the government verify that you didn’t just give assets to family members prior to submitting your application. In fact, any monetary gifts made during the five-year lookback period is heavily scrutinized and could seriously jeopardize your ability to qualify.

Creating and funding a trust earlier in life helps connect people with care

Nursing home care is expensive — costing hundreds of dollars a day and thousands of dollars every month. Even if you have spent a lifetime accumulating a substantial estate, a year or two in a nursing home facility can quickly deplete your savings.

To avoid these types of financial pitfalls, it’s important to be proactive about long-term care and Medicaid planning. One way to protect your finances and your ability to qualify for Medicaid is to establish a trust.

If you are close to retirement age or if your parents are retired, exploring long-term care planning now could save you all a lot of time, stress and financial losses down the road.