Most seniors will need living assistance eventually, and Medicare does not pay for custodial care, which is the type of care you would receive in a nursing home or assisted living facility. Although Medicaid can provide coverage for long-term care, what happens when you pass away and Medicaid comes after your assets? Let our Florence Medicaid lawyer explain how Medicaid estate recovery works and how to be prepared.
Medicaid and Long-Term Care Coverage
The Medicaid program provides long-term care coverage for those who need help meeting the high cost of nursing home care. Since its creation, the program has expanded its coverage to the point where it now serves as the single most important payment source for the country’s nursing homes. Without it, millions of American seniors would be unable to afford the cost of care and would find themselves struggling to cope with their health care and daily living needs.
What you need to know about qualifying for Medicaid
Now, some might wonder why there would be any need for planning if Medicaid can cover those costs. After all, the program was designed to help low-income Americans get health care coverage, right? The problem is that the Medicaid program’s eligibility standards include limits on both assets and income – and many seniors often struggle to meet those limits. While it’s true that those seniors can deal with the income limits by establishing a Qualified Income Trust to manage excess monthly income, assets can be more problematic.
Trying to obtain Medicaid assistance to pay for long-term care, you can divest yourself of assets. If you think you may need long-term care at the end of your life, you could give your loved ones their inheritances in advance so that you can qualify for Medicaid. But you do have to be aware of the five-year look back. When you apply for Medicaid, evaluators will examine your financial transactions going back five years. If they find that you have given away assets within five years of applying, your eligibility may be delayed.
We should point out the fact that it is never too late to implement a Medicaid plan. Ideally, you would divest yourself of assets five years before you apply, but you can still optimize your position if you take the appropriate steps.
Understanding how Medicaid estate recovery works
You can retain ownership of certain resources when you are applying for Medicaid without impacting your eligibility status. The biggest thing is your home. If you are a homeowner, your home is not considered a countable asset if you apply for Medicaid to pay for long-term care. However, there is an equity limit. Ask our Florence Medicaid lawyer about the current equity limits.
If you maintain personal ownership of your home throughout your life, and you used Medicaid to pay for long-term care, a lien could be placed on the home because Medicaid would be required to seek reimbursement from your estate. Options to protect against this depend on your individual situation. For example, if one of your children was living in the home and acting as your caretaker for at least two years before you apply for Medicaid coverage, you may be able to give that child the home, and the Medicaid program would not go after the home after you pass away during Medicaid estate recovery.
What happens if you don’t have a Medicaid plan?
The best way to avoid those consequences is to start early with your Medicaid planning. Our Florence Medicaid lawyer can help you to prepare a strategy that will ensure that your assets are properly organized in a way that facilitates your eligibility for the program benefits you may one day need. Using effective strategies and tools like irrevocable trusts, you can safeguard assets from creditors, certain tax liabilities, and the high costs of nursing home care. More importantly, you can protect those assets and ensure that they’re available to be passed on to your heirs when you pass away.
Join us for a FREE seminar today! If you have questions regarding Medicaid estate recovery or any other Medicaid planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (859) 372-6655 (Florence, KY), (606) 324-5516 (Ashland, KY), or (704) 944-3245 (Charlotte, NC or Huntersville, NC). We are here to help!
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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