Medicaid Planning is a very important part of any estate plan. If you do not want to pay out of pocket for nursing home care, and would like Medicaid to pay for your nursing home, you need to plan for how to do this.
When meeting with clients, I often get asked “If I go into a nursing home, will I lose my house?” The answer is complicated, but if the state’s medical assistance program, Medicaid, pays for your care, the state may be able to place a lien on your property to recover that payment.
For a single person to financially qualify for Medicaid, they are only allowed to have $2500, a vehicle and a house. The house however may, under certain circumstances, be subject to a lien being placed on it as a way for Medicaid to recover the costs paid for your nursing home care.
There are a number of ways to prevent this Medicaid recovery, but it is important to be mindful of the Medicaid “look back” period. The “look back” period is a period of 5 years prior to your application. Medicaid will do a thorough review of your finances and assets to determine if you made any gifts or transfers with the intent to impoverish yourself in order to qualify for Medicaid. If Medicaid determines that you made gifts during this 5 year period, you may be ineligible for Medicaid.
There are strategies to plan for Medicaid either to reduce assets to $2500, to protect existing assets, or to both reduce and protect assets at the same time. One strategy may include spending down the assets on certain expenditures such as improvements to your house. Another may be to put your assets into an irrevocable trust and relinquish control over those assets in order to qualify.
It is important to think about a number of considerations when planning for Medicaid. Can I pay out of pocket comfortably? How soon will I need nursing home care? If gifting my assets, am I okay with giving up control for purposes of qualifying for Medicaid? Have I considered Long Term Care Insurance?
If you or a loved one is planning on how to pay for nursing home care in the future, it is important to meet with a qualified Elder Law attorney to discuss all of your options.
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