As millions of America’s Baby Boomers transition into their older years, many are understandably concerned about their future living arrangements and long-term health care.
Such worries may be especially troubling if your personal financial situation and estate plans are not as comfortable as you would like. The high cost of nursing-home care can force some residents to rapidly exhaust their available resources. Then what?
Fortunately, Medicaid programs enable qualified participants to receive long-term care without having to deplete their personal finances. In fact, effective planning can protect your assets by transferring them to your loved ones.
Medicaid is the popular federal/state support program that provides medical assistance to low-income individuals, including senior citizens (ages 65 or older). Medicaid is the largest payer of nursing-home bills in the United States, and it is often the final resort for people who have run out of ways to pay for their long-term care and daily needs.
However, navigating and implementing Medicaid eligibility can be confusing, especially when you need to factor in a wide variety of countable and exempt assets to determine your qualifications. Exempt assets typically include items such as the family home, prepaid burial plots, one automobile, and term life insurance. It also is important to be aware of risks and drawbacks with Medicaid planning, including the potential for disqualification from the program.
How the Medicaid process works
Medicaid programs and eligibility requirements vary by state. In Missouri, the state Medicaid program is called the MO HealthNet Division. It provides health care access and housing services to low-income individuals who are elderly or disabled, as well as qualified people and families in many other circumstances. Beneficiaries are categorized into Medical Eligibility (ME) groups based on their specific factors. Your assets and monthly income must fall below a minimum standard to qualify.
It is possible to rearrange your finances, so that countable assets are traded for exempt assets or made inaccessible to the state. For example, instead of exhausting your savings on nursing-home bills, you could pay off your mortgage.
One of the reasons you do not want to liquidate all of your assets to cover your own nursing-home care is because you want to assist your loved ones financially, even after you die.
You can do that by establishing an irrevocable trust. Property placed in an irrevocable trust is excluded from your financial picture and therefore not considered a countable asset when determining Medicaid eligibility. By naming a proper beneficiary, the assets in the trust are sheltered from the state and preserved for your heirs.
What about healthy spouses who don’t need special care?
Making sure that your healthy spouse has money to live on also is a concern for many people who require nursing-home care.
When the state considers whether one spouse is eligible for Medicaid, the couple’s assets are pooled. The healthy partner is allowed to keep a spousal resource allowance that typically amounts to half of the couple’s total assets.
The healthy spouse may want to utilize jointly-owned, countable assets to purchase a single premium immediate annuity. By converting countable assets into an income stream, each spouse can keep all of his or her income rather than pooling their assets. This allows the spouse receiving treatment to qualify for Medicaid, while the healthy spouse still has a consistent source of income.
A wide range of essential advice for seniors
If you need some friendly legal guidance when dealing with Medicaid issues, contact Cordell Planning Partners. Our attorneys will give you insightful counsel on a variety of topics related to long-term care and many other issues affecting elder citizens.
For instance, even if you’re not yet concerned about your future health care needs, it still is important to have a comprehensive estate plan. When you designate which family members will inherit your possessions, you spare them the pain and cost of a probate fight or family disagreements when the time comes.
Our experienced elder law attorneys at Cordell Planning Partners provide smart solutions for seniors with essential legal protections such as estate plans, wills, trusts, and Power of Attorney documents.
Cordell Planning Partners offers free educational workshops where we explain various asset-protection programs, all in terms that are easy to understand.
To learn more, contact us today. You can even arrange to have a free one-hour initial consultation to discuss your individual planning priorities.