Medicaid was designed to help low-income people with few assets pay for their health care. While Medicare pays for many medical expenses when you are over 65, it won’t pay for nursing home care which can be prohibitively expensive. If you own any large assets, like a house, you won’t be able to qualify for Medicaid to help pay your expenses. With Medicaid planning, you can divest your assets so you can qualify for this government help.
When you need long-term care, your money won’t last long, even if you are a millionaire. You could easily spend tens of thousands of dollars a month on medical care and your money would be gone fast. Paying for long-term care is just about impossible if you aren’t a multi-millionaire.
If you think you might need Medicaid and you own a house, you might want to gift or transfer the house to your beneficiary early. This will reduce your assets and make your income low enough to qualify for Medicaid help. In most cases, you can only have a few thousand dollars in assets. If you own your home, you either have to sell it or allow the Medicaid program to put a lien on your home so they can be repaid.
If you have assets but they won’t be enough to pay for your long-term care, there are ways to protect your assets so you have something to leave to your heirs. You can get help from an estate planner and you can also learn about the different things you can do on your own.
An asset protection trust is one option, but you have to set it up at least five years before you apply for Medicaid or you won’t be able to get the help you need. A benefit of an asset protection trust is that you can live in your home as long as you want.
One of the most important things when it comes to Medicaid planning is that you need to think ahead so you can shed your assets at least five years before you need Medicaid. The costs of long-term care are so expensive that you can quickly run through your money, leaving nothing left to your heirs. Medicaid planning helps you preserve your assets and shelter your assets so you can provide something of value to your loved ones.