The cost of long-term care can overwhelm even a carefully constructed financial plan. In Delaware, nursing-home care can cost more than $15,000 per month, which can quickly deplete a lifetime of savings.
Many families assume they must simply pay those costs until nearly everything is gone before Medicaid will help. That is not always true.
With proper planning, you may be able to protect assets, preserve financial security for your spouse, and qualify for Medicaid benefits without spending everything you have worked to build. Even if a loved one is already receiving care, or who needs care immediately, planning opportunities may still be available.
The elder law attorneys at Brockstedt Mandalas Federico LLC (BMF) help Delaware families understand their options and develop practical plans tailored to their assets, family circumstances, and care needs.
The sooner you seek advice, the more options you are likely to have. Contact BMF to schedule a consultation about long-term care planning.
Delaware Long-Term Care Planning: What to Know
If you’re researching long-term care planning for yourself or a loved one, here is what our Delaware elder law attorneys think is most important to understand.
- Nursing-home care in Delaware can cost more than $15,000 per month, but you do not necessarily have to spend down everything before qualifying for Medicaid.
- Medicaid generally reviews transfers made during the 60 months before your application, and uncompensated transfers, like gifts or below-market sales, can create a penalty period.
- Tools like a Medicaid Asset Protection Trust or a Miller Trust can help protect assets or address excess income, but each comes with strict rules about timing and control.
- Even if a loved one already needs care, Delaware elder law attorneys may still help through Medicaid crisis planning, so it’s rarely too late to explore your options.
What Is Long-Term Care?
Long-term care generally refers to ongoing assistance needed because of age, illness, disability, or cognitive impairment. A person may need help with activities of daily living such as:
- Bathing;
- Dressing;
- Eating;
- Toileting;
- Transferring or moving safely; and
- Maintaining continence.
Long-term care may be provided:
- At home;
- In an assisted living or memory care community; or
- In a skilled nursing facility.
Medicare and private health insurance generally provide only limited coverage for long-term custodial care. As a result, families are often left trying to determine how to pay substantial monthly care expenses without sacrificing their own financial security.
How Can You Pay for Long-Term Care?
Long-term care is commonly paid for through one or more of the following:
- Personal income and savings;
- Long-term care insurance;
- Medicaid long-term care benefits;
- Certain annuities or other planning strategies; and
- A combination of private payment and available public benefits.
The right approach depends on many factors, including whether care is needed now or may be needed in the future, whether the person is married, the nature and value of the person’s assets, and how those assets are titled.
There is no single strategy that works for every family. A plan that protects one person’s home or savings could create serious tax, Medicaid, or estate-planning problems for someone else.
Before selling property, transferring money, adding a child to an account or deed, or paying substantial care expenses, speak with an experienced Delaware elder law attorney. A well-intentioned decision can affect Medicaid eligibility for years.
When Should You Begin Long-Term Care Planning?
Ideally, long-term care planning begins while you are healthy and fully able to participate in financial and legal decisions. Early planning may provide more opportunities to protect assets and coordinate your long-term care plan with your estate plan.
However, it is not necessarily too late to plan merely because:
- A loved one has received a diagnosis of dementia or another progressive illness;
- Home care has become difficult to manage;
- A spouse is entering assisted living or a nursing facility;
- A family is already paying privately for care;
- A Medicaid application is being considered; or
- A loved one is hospitalized and cannot safely return home.
Different strategies apply at different stages. If care is already needed, the focus may shift from advance planning to Medicaid crisis planning, but meaningful options may still remain.
How Does Delaware Medicaid Long-Term Care Coverage Work?
Medicaid may help pay for long-term care when an applicant satisfies the program’s medical, financial, and other eligibility requirements.
Eligibility is not determined simply by adding together everything the applicant has owned during the preceding five years. Instead, Medicaid examines the applicant’s current income and resources and reviews certain transfers made during the applicable five-year lookback period.
Some assets may be excluded or treated differently under Medicaid rules. Depending on the circumstances, these may include:
- A primary residence;
- One vehicle;
- Personal belongings;
- Certain prepaid burial arrangements; and
- Some assets belonging to the applicant’s spouse.
These exclusions are subject to important limitations. For example, a home may be exempt when determining initial eligibility but remain vulnerable to estate recovery or other claims later. The treatment of the home may also depend on its value, who lives there, whether the applicant intends to return, and how the property is titled.
Because Medicaid rules are highly technical and fact-specific, families should not assume that an asset is protected merely because it is “exempt.”
You Don’t Have to Feel Powerless
You’ve spent a lifetime building financial security for your family, and the possibility of needing long-term care shouldn’t take that away. Whether you’re planning years ahead or already facing care expenses, our Delaware elder law attorneys can help you understand what can be protected and what steps make sense next.
Schedule A ConsultationWhat Is the Medicaid Five-Year Lookback Period?
When someone applies for Medicaid long-term care benefits, Medicaid generally reviews transfers made during the 60 months preceding the application.
If the applicant gave away money or property, sold an asset for less than fair market value, or made certain other uncompensated transfers during that period, Medicaid may impose a period of ineligibility. During that penalty period, the applicant may be responsible for paying the full cost of care.
Common actions that may create Medicaid problems include:
- Giving cash to children or grandchildren;
- Adding someone else’s name to a deed or financial account;
- Selling property for less than its fair market value;
- Paying a family caregiver without a properly structured agreement; and
- Moving money into a trust without first obtaining legal advice.
Not every transfer creates a penalty. Certain transfers to a spouse, a disabled child, a caregiver child, or another permitted recipient may be exempt when all legal requirements are satisfied.
Do not make gifts or retitle assets based solely on advice from friends, facility personnel, or generalized information found online. Contact BMF before making a transfer that could affect Medicaid eligibility.
Can a Medicaid Asset Protection Trust Protect Your Assets?
A Medicaid Asset Protection Trust, commonly called a MAPT, is an irrevocable trust designed to protect certain assets while allowing the person creating the trust to retain carefully limited rights.
When properly drafted, funded, and administered, a MAPT may protect assets from being counted for Medicaid eligibility after the applicable lookback period has passed. It may also help preserve those assets for the trust creator’s intended beneficiaries.
A MAPT is not appropriate for everyone, and transferring assets to the trust does not make them immediately protected. Transfers to a MAPT are generally subject to Medicaid’s five-year lookback rules.
In addition, the trust creator must give up significant control over the transferred assets. The trust must be drafted carefully so that the retained rights do not cause the assets to remain available for Medicaid purposes.
Before creating a MAPT, an attorney should evaluate:
- The assets you want to protect;
- Your current health and anticipated care needs;
- Your available income and resources;
- Potential tax consequences;
- Your family relationships;
- Who should serve as trustee; and
- Whether you may need access to the transferred property.
A properly designed trust should coordinate with—not undermine—your broader estate plan.
What Is a Miller Trust?
A Miller Trust, also known as a Qualified Income Trust, serves a different purpose from a Medicaid Asset Protection Trust.
A Miller Trust does not protect investment accounts, real estate, or other accumulated assets. Instead, it may be used when a Medicaid applicant’s monthly income exceeds the program’s applicable income limit.
The applicant’s income is deposited into the trust and then administered and spent in accordance with Medicaid requirements. Establishing the trust alone is not enough. Deposits, payments, recordkeeping, and account administration must be handled correctly to maintain eligibility.
An elder law attorney can determine whether a Miller Trust is necessary and provide instructions for properly funding and administering it.
What If a Loved One Needs Care Now?
Families often contact us after a sudden hospitalization, a dementia diagnosis, or the realization that a loved one can no longer remain safely at home. At that point, they may believe they have missed their opportunity to protect anything.
Although advance planning generally provides more options, Medicaid crisis planning may still help preserve substantial assets.
Depending on the circumstances, a crisis plan may involve:
- Protecting assets for a spouse who remains at home;
- Purchasing exempt or permitted goods and services;
- Making home modifications related to safety or accessibility;
- Using a Medicaid-compliant annuity or promissory note;
- Restructuring the ownership of certain assets;
- Documenting compensation paid to a family caregiver;
- Making a permitted transfer to a spouse, disabled child, caregiver child, or other qualified recipient; or
- Coordinating private payment with the timing of a Medicaid application.
The appropriate strategy depends on the applicant’s finances, family structure, health, marital status, and prior financial transactions. Crisis planning should be undertaken only after a careful review of the specific facts.
If your family is already paying for care, do not assume you must continue spending until the money is gone. Contact BMF as soon as possible to learn whether planning opportunities remain.
Related Reading: Need a Nursing Home Now? What Delaware Families Can Do Immediately
How Can You Plan for Possible Incapacity?
Long-term care planning is not limited to paying for care. It should also address who will make financial and medical decisions if you become unable to act for yourself.
Without effective planning documents, family members may need to ask a court to appoint a guardian. That process can be public, time-consuming, expensive, and emotionally difficult.
A comprehensive incapacity plan may include:
- A durable financial power of attorney;
- An advance healthcare directive;
- Authorization to access medical information;
- A living will;
- Appropriate trust provisions; and
- Written guidance concerning care preferences.
The wording of these documents matters. A standard power of attorney may not grant an agent the authority needed to implement Medicaid planning, establish or fund certain trusts, transfer property, or protect assets for a spouse.
Reviewing these documents before a crisis can give your family the authority and direction needed to act when time matters most.
Why Work with a Delaware Elder Law Attorney?
Medicaid planning involves much more than completing an application. An effective plan must take into account Medicaid regulations, estate planning, tax consequences, real estate, family dynamics, healthcare needs, and the possibility of estate recovery.
BMF’s multidisciplinary team can help you:
- Evaluate how long-term care expenses may affect your family;
- Identify assets that may be protected;
- Understand the Medicaid eligibility and lookback rules;
- Coordinate Medicaid planning with your estate plan;
- Prepare powers of attorney and healthcare directives;
- Establish appropriate trusts;
- Develop a plan for a spouse who remains at home;
- Address prior transfers or other potential eligibility issues; and
- Prepare and guide you through the Medicaid application process.
We do not believe families should have to navigate these decisions alone—or discover after the fact that an avoidable decision has placed their savings or eligibility at risk.
Related Reading: What Does an Elder Law Attorney Do & How Can They Help You and Your Family?
Take the Next Step Before a Crisis Limits Your Options
You have spent a lifetime building financial security for yourself and your family. The possibility of needing long-term care should not leave you feeling powerless.
Whether you are planning years in advance, beginning to see signs that a loved one needs more help, or already facing significant monthly care expenses, BMF can help you understand what can be protected and what steps should come next.
Do not wait until your family is forced to make decisions during a hospitalization or other crisis. Contact Brockstedt Mandalas Federico LLC today to schedule a consultation with a Delaware elder law attorney.
This page provides general information and is not legal advice. Medicaid eligibility and planning outcomes depend on the applicable law and the specific facts of each case.
Legal References Used to Inform This Page