elder couple looking into each others eyes while a nurse smiles down at them

When planning for your future, it is vital that you think about your health and possible outcomes that put your health at risk. While you may be healthy now, that quickly can change in the future, and you need to be able to have the right plan in place for that possibility.

Like many seniors, you may be forced to experience long-term care of some kind. Having a plan in place that accounts for that outcome is a necessary aspect of planning for your future.

This requires the assistance of an elder law attorney, who can help create an estate plan that fits your unique situation. They can help assess your assets and create documents necessary, such as a Power of Attorney and a will, that reflect your wishes.

They also can assist you in Medicaid planning, which will help you pay for the care that you may require.

What is Medicaid?

Medicaid is a federal-state program that provides medical assistance to low-income individuals, including senior citizens ages 65 and older. Eligibility for Medicaid varies by state, but federal minimums must be observed. Additionally, your monthly income and accessible assets must fall below a minimum standard to qualify.

With so many stipulations that could disqualify you from receiving Medicaid, it is essential to have an elder law attorney who understands the ins and outs of the situation and can create strategies to make assets and income inaccessible to you.

Understanding an irrevocable trust

One method that an elder law attorney can do is creating an irrevocable trust. Property placed in an irrevocable trust is excluded from your financial picture and thus, not considered a countable asset when determining Medicaid eligibility.

From there, you would need to name a proper beneficiary, so that the principal deposited into the trust can be sheltered from the state and preserved for your heirs.

Medicaid myths

Many who look to qualify for Medicaid are under the false impression that they must spend down their assets, in order to qualify for the program and pay for the long-term care that they need. Many also believe that they simply should pay for the care out of pocket.

However, with the rising costs of long-term care, paying out of pocket simply is not an option for many. Additionally, spending your life’s work on what could be years of health care, instead of preserving your assets for your loved ones, is not intuitive.

Medicaid planning allows you to shelter your countable assets, while preserving assets for your beneficiaries and providing your spouse.

Exploring an annuity

This provision for your health spouse is a purchasable annuity and is factored into the process of qualifying for Medicaid.

When the state considers whether one spouse is eligible for Medicaid, the couple’s assets are pooled, and your healthy spouse is allowed to keep a spousal resource allowance that typically amounts to half of the couple’s total assets.

Your healthy spouse can then use some of the jointly-owned countable assets to purchase a single premium immediate annuity. In doing this, your healthy spouse is turning countable assets into an income stream. This allows you to qualify for Medicaid and receive care, while giving your spouse a steady stream of income.

Potential drawbacks

While Medicaid planning can be beneficial, there are potential drawbacks to pursuing eligibility, including potential look-back periods or estate recoveries, among others.

When you apply for Medicaid, any gifts or transfers of assets made within five years of the date of application are subject to penalties. Anything beyond those five years are not.

Estate recoveries are actions by the state government to collect money from the Medicaid recipient’s estate after the recipient’s death.

In order to prevent these occurrences or any other types of missteps when attempting to qualify for Medicaid, it is imperative that you have an elder law attorney to help navigate the ins and outs of this complex situation. By relying on their guidance, you can rest easier knowing that if something were to happen to your health, you and your loved ones are protected.

The Importance of Medicaid Planning