You may not realize it right now, but there is a very good chance that you will need to qualify for Medicaid benefits at some point in the future. You should be planning for that possibility now though in order to protect your heard-earned assets. How can the need to qualify for Medicaid threaten your assets? The answer to that question can be found in the Medicaid eligibility guidelines that prevent an applicant from owning assets valued at over the program limit – and that limit is very low. The good news is that Medicaid attorneys understand both the problem and the solution and can, therefore, help you protect your assets.
What Is Medicaid?
Medicaid is predominantly funded by the U.S. federal government; however, the individual states have the option to supplement federal funds. Although Medicaid is a federal program, it is administered by the individual states. As such, both the eligibility criteria and the benefits provided to eligible participants will vary somewhat from one state to the next. As a general rule, however, states offer Medicaid to low income families, pregnant women, children, the disabled and the aged.
Why Would You Need to Qualify for Medicaid?
You may have made it through the majority of your working years already without giving your eligibility for Medicaid benefits a second thought because you have employer sponsored health insurance. That insurance, however, will likely terminate when you retire at which time you will probably turn to Medicare to cover your healthcare expenses. While Medicare will cover the majority of your healthcare expenses as a senior, one thing Medicare will not cover is long-term care costs. At an average yearly cost of $80,000, those costs can be significant as well. The good news is that Medicaid does cover LTC expenses; however, you must qualify for benefits first.
How Can Qualifying for Medicaid Threaten Your Assets?
Because Medicaid is a “needs based” program, an applicant must show a financial need for the benefits to be eligible. To determine if an applicant has a financial need, Medicaid imposes both an income and a “countable resources” limit that cannot be exceeded to be eligible for benefits. The income limit is tied to the Federal Poverty Level for your area. Most seniors living on a fixed income do not have a problem with the income limit; however, the “countable resources” limit is another thing altogether. Your countable resources are your assets. In most states, the countable resources limit is as low as $2,000. Although some assets are exempt from consideration, it is still easy to see how the value of your assets could exceed the limit. If they do, Medicaid will impose a waiting period. During the waiting period, you will be expected to “spend down” your assets, meaning you are expected to sell those assets and rely on the proceeds to cover your LTC expenses during the waiting period. The spend-own requirement is what puts your assets at risk. Because Medicaid also uses a five-year “look-back” period, transferring assets to children or other loved ones in anticipation of the need to qualify for Medicaid is not an option.
Medicaid Attorney Can Help
Experienced Medicaid attorneys understand the dilemma faced by many people who may need to qualify for Medicaid one day. By working with an experienced attorney and incorporating Medicaid planning into your estate plan well ahead of the need to qualify for benefits you can protect your assets and ensure that you qualify when the need arises. Although it is best to start Medicaid planning at least five years prior to the need to qualify, if you find yourself in need of Medicaid benefits in the immediate future a Medicaid attorney may still be able to help you protect some of your assets using last minute Medicaid planning strategies.
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns about how Medicaid planning can protect your assets, contact the experienced Massachusetts Medicaid attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
- It’s Important to Have a Coordinated Estate Plan - July 29, 2021
- Revocable Trusts Are Not Always Treated the Same as an Individual - July 27, 2021
- Roth IRAs Can Be a Great Planning Strategy: Basics - July 22, 2021