Long-term care is expensive. If you or someone you care about may need nursing home care in the future, planning now can help preserve assets and secure eligibility for public benefits. Understanding the rules for Medicaid planning, estate transfers, and care arrangements makes the process easier.
Understand the Real Cost of Care in Washington
In 2024, the median cost of a private room in a Washington nursing home was over $12,000 per month. Even shared rooms often cost over $10,000 per month. These expenses can quickly drain your retirement savings, especially if you need care on an ongoing basis.
Medicare pays for short-term rehabilitation in limited circumstances. That means you must pay out of pocket, rely on long-term care insurance (if you have it), or rely on Medicaid. The key is making sure you qualify when you need it, without losing everything.
Know How Medicaid Works in Washington
Medicaid covers long-term care for those who meet strict financial and medical requirements. To qualify for long-term services and supports (LTSS) through Medicaid, you must be a Washington resident whose income is under the eligibility threshold. You also must require assistance with your daily activities.
The eligibility requirements can be difficult to meet. Many assets, including bank accounts, investments, and second properties, are considered countable. However, your primary home (up to a specified equity limit) and one vehicle are generally exempt. After death, however, the state may seek to recover Medicaid-paid long-term care costs from the applicant’s estate.
Plan Early To Protect Your Assets
Washington enforces a 5-year look-back period for Medicaid applicants. Transferring assets for less than fair market value during that period may lead to penalty periods during which Medicaid coverage is delayed.
Certain estate planning strategies can help, including:
- Irrevocable trusts: Properly structured and funded at least five years before applying, these can remove assets from your countable estate and help avoid Medicaid penalties. However, you lose control of the assets entirely.
- Medicaid-compliant annuities: Certain financial products may convert countable assets into income in ways compliant with Medicaid rules.
- Lifetime gifting: Instead of an irrevocable trust, gifting to your intended beneficiaries during life may be the right choice for your family.
Without a sound plan, a sudden health crisis could force you to spend down your savings quickly or sell property to cover costs.
Consider the Washington Cares Fund
Washington’s WA Cares Fund is a public long-term care insurance program funded through a 0.58% payroll tax on employee wages starting July 2023. Starting in July 2026, eligible residents will be able to access up to $36,500 in lifetime benefits for approved long-term care services.
This program is funded through payroll deductions. However, while this fund may help cover limited in-home care or adult day services, it won’t come close to covering extended nursing home stays.
WA Cares might not fully cover your care, but it’s an important part of the overall planning picture for Washington residents. Note that all W-2 employees contribute automatically. If you’re self-employed or haven’t paid into the fund long enough, you may not qualify for benefits. Federal employees or tribe businesses may be exempt.
Update Your Legal Documents
Having the right legal tools in place makes the process significantly easier for you and your loved ones. Consider including these essential documents in your estate plan:
- Durable power of attorney: This document lets someone you trust manage your finances and legal matters if you become incapacitated. Without it, your loved ones may need to go through a guardianship process.
- Advance Healthcare Directive: Healthcare directives are also called living wills. These documents outline your preferences for medical care at end-of-life.
- Supplemental Needs Trusts in Wills: Washington state statute allows for someone to direct funds into a Supplemental Needs Trust (SNT) for the benefit of another in a Will. An SNT will preserve the beneficiary’s eligibility for needs-based public benefits such as Medicaid or Supplemental Security Income (SSI) by ensuring the trust assets are not counted as their personal resources, while still allowing the funds to be used to enhance their quality of life.
Work With a Washington Estate Planning Attorney
ELG Estate Planning helps Washington families prepare for the future. Contact us today for a consultation.