Most people do not elect to spend all of their retirement funds. These hard earned funds are either reserved for inheritances for children and grandchildren or are spent for them on medical bills and long-term care. Medicare has major gaps in coverage and Medicaid is only for those with low assets and low incomes. If you do not qualify for Medicaid, you can plan on spending a large portion on medical and long-term care, which can cost at a minimum $400 per day.
There are several options to consider when your prepare for end of life decisions:
1. Long-term care insurance. This is usually best if purchased earlier in life. There are several options that you can select from. The key is to purchase before you have a life event that would disqualify you for coverage.
2. Spend down. Use your cash to pay off debt for excluded assets in order to qualify for Medicaid.
3. Trusts. Use a revocable trust to transfer assets to, but make sure you do so at least five years before you apply for Medicaid.
4. Give it away. Use you gift tax exemption to give your assets away. Again, the five year look back period should be considered to avoid disqualifications or penalties.
The earlier you prepare the better. An Elder Law attorney can help you in your decision making.