Tips For Medicaid Planning

Creating a successful and comprehensive estate plan requires you to do much more than just decide how you wish to distribute your estate assets after you are gone. It also requires you to think ahead and guard the assets you acquire over the course of your lifetime so that there is something left to distribute at the end of your life.

Because it is intended to help low-income recipients, Medicaid uses both an income and an asset threshold that you cannot exceed if you wish to qualify. The asset limit is typically exceptionally low — $2,000 for an individual in most states.

While some primary assets, such as your home or a single vehicle, are exempt, most seniors who have been saving for decades have assets that exceed the limit.

2. Consider Costs of Long Term Care

The important issue with the need for long term care from an estate planning perspective is the cost of that care. Nationwide, the average cost of long term care in 2020 was about $100,000 per year.

Since neither Medicare nor most private health insurance plans cover LTC expenses, you would need to pay those expenses out of pocket unless you qualify for Medicaid which does cover LTC costs.

3. Plan Early

Waiting until the last minute to worry about qualifying for Medicaid puts your assets at risk because of the five-year “look-back” rule. The five-year look-back rule allows Medicaid to check for asset transfers made within the last five years for less than fair market value. If any are found, Medicaid may impose a waiting period during which time you will not be eligible for Medicaid benefits.

4. Do Not Worry About Your Spouse

There was a time when qualifying for Medicaid could leave a spouse without income or resources; however, the Medicaid Spousal Impoverishment rules now prevent that from happening.

5. Don't Assume It Is Too Late

While it is always best to include Medicaid planning in your estate plan as early on in your life as possible to ensure your eligibility for Medicaid in the future, should you need it, you may still be able to take advantage of some Medicaid planning tools and strategies if you suddenly need to qualify for Medicaid and did not plan ahead.

You might, for example, be able to use a common last minute Medicaid planning strategy that involves converting a non-exempt asset to an exempt asset.

Interested in Working With Us?

If you need any help regarding your business or other legal matters please reach out to us directly here and schedule a call with one of our paralegals on our scheduling page here.