Most people 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 to protect assets from nursing home and Medicaid recovery.
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
To pay for long-term care, many people will try to divest themselves of assets. They give their loved ones their inheritances in advance to try to qualify for Medicaid since Medicaid is currently paying for the majority of the long-term care that seniors are receiving. But you can’t just give your assets away. You must be aware of the five-year look back and the rules that limit how you can transfer assets if you are inside that look back period. 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 will probably be delayed.
We should point out that it is never too late to implement a Medicaid plan. Ideally, you would plan more than five years before you apply, but even if you are in an emergency situation, you can often still take steps to save assets under appropriate circumstances.
Why is there a need for Medicaid planning?
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. Seniors can deal with the income limits by establishing a Qualified Income Trust that applies excess monthly income to the nursing home in a way that enables applicants to meet the eligibility standards. (Qualified Income Trusts are often used in Kentucky but are not needed in North Carolina.) Assets can be more problematic, though. Without a good Medicaid planning, it is more difficult to protect assets from nursing home and Medicaid recovery.
Understanding how Medicaid recovery works
When you apply for Medicaid, you can retain ownership of certain resources without impacting your eligibility. The biggest thing is your home. If you are a homeowner, your home is not considered to be 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 direct personal ownership of your home throughout your life and use Medicaid to pay for long-term care, a lien could be placed on the home because Medicaid is required to seek reimbursement from your estate. As a response, you may be able to transfer ownership of the home to family members before you apply for Medicaid, depending on the circumstances.
For example, if one of your children was living in the home to act as your caretaker for at least two years before you apply for Medicaid coverage, you may be able to that child the home, and the Medicaid program would not go after the home after you pass away during Medicaid recovery efforts.
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 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) or (606) 324-5516 (Ashland, KY) or for individuals in North Carolina, at (704) 944-3245 (Charlotte, NC and Huntersville, NC). We are here to help!