Do you know that the cost of a nursing home or long-term assisted living may deplete your assets rapidly? For the elderly, getting into Medicaid planning should be done sooner than later. There are many misconceptions about planning for your long-term health care which may have discouraged many qualified individuals from applying. Today, we’ll look at some of the most common myths vis-a-vis facts about the Medicaid planning process.
Medicaid is the federal and state program that covers long-term medical care costs for those with limited income and resources. In Michigan, this is often referred to as Medical Assistance (MA) focused on residents who are at least 65 years old.
Aside from eldercare, the medical assistance program also provides health coverage to low-income adults, children, pregnant women, or people with disabilities. It covers the cost of a nursing home, nursing services, care plans, costs of living in an assisted living facility or hospice, caregiving, and other long-term-care expenses.
For those who have a loved-one already in a care facility or in need of support to cover care-services, Medicaid crisis planning is often initiated to help prevent assets and retirement savings from being depleted. The strategies used here are all compliant with the federal Medicaid law and state statutes and regulations.
Since Medicaid law may be complex, there are different legal strategies that your estate planning lawyer may use to help you. Some of the factors that estate planning attorneys will look into are the total value and types of assets in your estate, your age and health condition, and family circumstances such as being divorced or having a child with a disability.
Facts About Medicaid Planning
Here are some of the most important things you should know about the Medicaid program and how Medicaid planning can benefit you.
#1 Advanced Medicaid planning helps protect your assets.
By engaging in advance Medicaid planning, you get to protect your financial resources and at the same time access money to cover the cost of living expenses by the time you access Medicaid. Medicaid planning grants you various means to have certain assets excluded from Medicaid income and asset calculations. Some of the most common asset protection strategies are sending gifts to your dependent children, spouse, or relatives; creating an irrevocable trust, transferring homeownership, or giving assets to your intended beneficiaries.
#2 Medicaid planning helps you overcome stringent requirements
Medicaid eligibility requirements are strict. To qualify for critical Medicaid benefits, you need to fall under a certain income and asset limit. People who fail to plan for this care insurance usually have a little bit more than the allowable income and miss out on the benefits. When determining your eligibility for Medicaid, the Medicaid office looks at all potential sources of income such as your wage, social security, annuities, pensions, alimony, and owned assets. Some of the countable assets are your investment and financial accounts, real estate, and cash.
Fortunately, there are certain properties exempted from income computation such as your vehicle or car, home, and household items. If you want to learn more about exemptions to the income limitation, you should consult a local estate planning attorney about it before it’s too late.
#3 There is an asset-transfer penalty period
This may appear contradictory to the first two truths but there is a “look-back” period to prevent a family-member from purposely transferring property to have a loved one qualify for Medicaid’s long-term care services. Take note that asset transfers within the five years before your Medicaid application are penalized. Penalties can be in the form of fines or disqualification from getting the monthly benefits for some time.
Multiple transfers recorded within this period will be calculated as one amount to determine the filer’s penalty period. One can only be exempted from paying the penalties if they meet any of the following exemptions:
- The imposition of the transfer penalty creates an undue hardship
- Home transfers are not subject to a penalty if given to a family member such as the spouse, a child below the age of 21, a child who is blind or disabled, a sibling who has equity on the house and has been residing there at least a year after the recipient’s institutionalization, an adult child who has been the home caretaker at least two years after admission to a medical facility
- Sole benefit trusts established for the benefit of persons with disabilities who are below 65. This must have been established by the parent, guardian, or the court and has a Medicaid pay-back provision.
- Asset transfers whose purpose is other than merely qualifying for nursing home coverage through Medicaid
Misconceptions about Medicaid Planning
Even with the advantages gained from planning before nursing home care, there are still several myths that discourage elders from subscribing to this process.
#1 It’s too late to protect assets when you’re an elder
There is never a time where preserving your assets becomes too late. But what usually happens is that senior citizens and their families depend on the nursing home’s advice about how they should manage their finances before trying to qualify as a Medicaid beneficiary. As nursing homes may benefit from you spending more on your accommodation, they won’t normally refer you to an elder law attorney.
#2 I won’t qualify for Medicaid because of how much I have
It doesn’t necessarily follow that if you have a lot of money, you won’t be considered for a Medicaid grant. Always ask for inputs from qualified elder law attorneys first. Senior citizens deserve to know all long-term care options and care planning before making an informed decision.
#3 Medicaid planning is illegal
This is perhaps the greatest misconception about planning for your long-term healthcare under the Medicaid program. Some would believe that it requires you to hide your assets or engage in activities that are illegal when in fact, Medicaid planning is simply about legal strategies allowable under the federal and state law to maximize your “exempt transfers”.
Interested in Medicaid Planning
Of course, this means that you will take the time to learn about Medicaid Laws, particularly about look-back dates, Medicaid coverage, penalty period, and eligible nursing facility services among others.
With Medicaid planning, the general rule is that the sooner you act the more money you save and the less out-of-pocket home costs for your loved ones. When done correctly, this legal process allows you to prevent your assets from being suddenly exhausted when there is a need to cover costs for your long-term card. If you want to protect your wealth, assets, and family, make sure to consult with our experienced estate planning lawyers from Entrusted Estate and Asset Protection, PC. You can schedule a consultation with an estate attorney to explore your Medicaid planning options and see how these will work with your estate plan. Call us now.