Yes, it’s possible to protect assets against Medicaid

Did you know that someone turning 65 today has around a 70 percent chance of needing medical support and long-term care during his or her life? According to the U.S. Department of Health and Human Services, that’s the truth, but it’s something many people don’t fully recognize.

When you get older, the options for paying for long-term care include long-term care insurance, Medicaid and your own money. The problem with using your own funds is that they simply don’t last long once you start needing nursing home care or assisted-living options. Most people want to use Medicaid, but Medicaid requires you to qualify based on your means. If you have too much money or too many assets, you won’t qualify.

How much can you earn or possess and qualify for Medicaid?

To qualify for Medicaid, you first have to be 65. Once you reach that age, limits on your income and possessions vary based on what you need as far as care goes. For a nursing home, you may not earn over $2,250 annually. Another $2,000 is the limit for resources in addition to the annual gross income. Overall, people must fall around 200 percent below the federal poverty level to qualify for the Medicaid coverage they’re seeking.

What can you do if you’re not sure if you qualify?

Some of the things you can do to start with is to give away property or assets to family members earlier in your life. If you do this, remember that Medicaid has a look-back period where it may try to determine if you gave away assets to “hide them” and seek benefits when you aren’t in need.

Placing items in asset-protection trusts also protects your hard-earned money and assets against being used for your medical care before Medicaid kicks in. An income trust is another option, because these irrevocable accounts hold your excess income but require a trustee to dole out what you need when it’s appropriate to do so.

Another possible option, if a parent needs Medicaid now, is to accept a Medicaid penalty for giving away a portion of his or her assets now. The key to surviving this is to keep only enough assets to pay for your nursing home care during the penalty period and to do so in the form of a private annuity or promissory note. When your funds run out, you should then qualify for Medicaid immediately.

Medicaid doesn’t have to cost you everything you’ve earned in your life, but proper planning matters. Think ahead to get the most out of your estate.

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Kevin Tharpe

With 25 years of experience, Kevin understands how estate planning, special needs planning, and government benefits programs work together. This is a crucial element of a thorough plan. He explains your eligibility for benefits programs and ensures that you do not make costly mistakes that may disqualify you or deplete your assets.

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