With the cost of long-term disability or elder care constantly increasing, families frequently find themselves struggling to afford such care, which can wipe out an older adult’s hard-earned wealth. Fortunately, the Medicaid program can provide benefits that assist with these costs. However, the program imposes strict financial eligibility requirements for such benefits. Careful estate planning with the assistance of an experienced elder law attorney can help you or a loved one secure critical financial assistance for your well-being without losing everything. It is never too late to engage in Medicaid planning, even if you or your loved one is already in a nursing home.
Understanding Medicaid Planning
Medicaid planning is a type of estate planning focused on obtaining and maintaining eligibility for Medicaid and other means-tested government benefits. Many people have assets that put them over the limit for qualifying for Medicaid benefits but still need help paying for care as they age. Medicaid planning utilizes legal strategies to help such individuals get under the benefits threshold without divesting themselves of the assets they’ve worked a lifetime to acquire.
Medicaid Eligibility Requirements
Medicaid determines eligibility primarily based on an applicant’s finances. For long-term care benefits, Medicaid requires an applicant to have total assets below a specific threshold, although Medicaid rules exempt some assets from counting. For applicants with spouses, Medicaid will also look at the healthy spouse’s finances, as the program’s rules anticipate that spouses will help cover the cost of an ill or disabled spouse’s long-term care.
Other Medicaid eligibility requirements include having U.S. citizenship or lawful permanent residency, being 65 or older or disabled, and meeting medical requirements consistent with the level of care requested.
Common Medicaid Planning Strategies
Frequently used Medicaid planning strategies include:
• Irrevocable Trusts – Establishing Medicaid trusts is one of the most common Medicaid planning strategies. A Medicaid trust is an irrevocable trust that holds a Medicaid applicant’s assets, removing those assets from the applicant’s estate so the applicant can qualify for benefits.
• Spending Down – Medicaid rules allow applicants to spend down assets on certain qualifying expenses, such as home modifications to install disability accommodations, purchasing medical devices not covered by insurance, and paying down a mortgage or credit card debt.
• Gifting – Although giving away assets for less than fair value may violate Medicaid rules, the program allows limited gifting to family members, such as gifting a primary residence to a spouse, sibling, or child, to reduce an applicant’s total assets.
• Long-Term Care and Disability Insurance – Individuals with a healthy spouse may purchase Medicaid complaint annuity products, which convert assets into non-countable income for the healthy spouse.
When Do You Start Medicaid Planning
Individuals should consider Medicaid planning long before long-term care becomes necessary. However, it is never too late to consider Medicaid planning – even if you or your loved one has entered a nursing home. The Medicaid program has a “look-back” rule that reviews an applicant’s asset transactions for the past five years. Asset transactions that violate Medicaid rules may result in a “penalty,” which delays an applicant’s eligibility for Medicaid benefits. If you have engaged in gifting prior to entering a nursing home, a certified elder law attorney can provide you options to avoid or minimize a potential “penalty”.
Contact a Medicaid Planning Attorney Today
When you or a loved one require expensive long-term care, Medicaid benefits can help cover the costs. An experienced Medicaid planning attorney can help your family secure eligibility for benefits. Contact Kreisher Marshall & Associates, LLC, today for an initial consultation with our legal team to discuss your options and the suitability of Medicaid planning for your circumstances.