Can I Plan for Medicaid If I Have Assets?
Although there are income and resource limits set for Medicaid eligibility, many people of moderate or great wealth in need of long-term care are accepted into the program. While it might seem contradictory at a glance, you can have money – and even be wealthy – and still qualify for Medicaid.
The key to this possibility is careful estate planning that configures your assets in a manner suited to allow for Medicaid approval. By using Medicaid-approved trusts, you can protect the wealth you have even if it’s not enough to afford the long-term care you need on its own.
Medicaid-Approved Trusts Can Help You Protect Your Wealth
Careful planning with a Medicaid-approved trust can help you qualify for Medicaid without spending down your estate.
By funding your assets into a special irrevocable trust, you can continue to benefit from your wealth in structured disbursements. When this is done without triggering a lookback penalty, your application will likely be successful as long as you meet the other eligibility criteria.
Medicaid Planning Within the Lookback Period
There’s still hope if you need to apply for Medicaid sooner, but you’ll want to get an attorney’s assistance. When you transfer your assets into a Medicaid-approved trust within the lookback period, Medicaid will deny your application and deem you ineligible for benefits for a certain amount of time.
Usually, this penalty is a simple math problem: the number of ineligible months equals your total assets divided by the average cost of nursing home care.
For Example: If the average cost of nursing home care is $100,000 per year, and your assets total $700,000, then you would be assessed an ineligibility penalty of seven months.
While funding a Medicaid-approved trust triggers this penalty, its disbursements can allow you to afford any care you need for the duration of the penalty period. Once this period is over, you can reapply for Medicaid and be approved the second time.
What Is Medicaid?
Medicaid is a government-sponsored public health insurance program mostly operated by each state’s government. This program exists to provide Americans in need with access to medical care and resources, including forms of long-term care such as in-home care and assisted living care.
Medicaid Income & Resources Requirements
There are several qualification requirements for Medicaid for senior citizens in New York, but the limits on income and resources are the most pertinent to this topic. Because Medicaid is intended to assist those who need help affording certain kinds of care, those who exceed specific limits set on income or countable assets are disqualified from receiving Medicaid benefits.
In 2022, a senior living alone could make no more than $934 per month and maintain more than $16,800 in countable assets to qualify for Medicaid. These limits increase according to the size of the senior’s household, but the point is that even the amount in the average Social Security check can disqualify a senior citizen from Medicaid benefits.
How Do I Qualify for Medicaid If I Have Assets?
If your income and countable assets exceed the Medicaid eligibility requirements, you aren’t out of luck. In fact, many people who would otherwise disqualify for Medicaid long-term care get it – but, planning is essential.
Medicaid’s Lookback Period
You might think that you can simply transfer your savings, home, and other high-value assets to someone else or a trust the day before you apply for Medicaid, but it’s not that simple.
You want to anticipate your need for Medicaid a few years before you actually need it. This is because Medicaid will investigate your finances from the date you applied up to a specific point in the past. This is known as the lookback period, and its purpose is to assess whether or not you meet the income and resources requirements.
The lookback period has historically been 60 months (5 years). It is expected to change to at least 15 months (1.25 years) but no more than 30 months (2.5 years) by Oct. 1, 2022. This reduction in the lookback period can make planning a little easier for those with a lot of wealth to transfer into a Medicaid-approved trust.
If Medicaid finds any asset transfers within the lookback period that indicate you exceeded its income and resources limit, it will deny your application and apply a penalty that bars you from reapplying for a specified amount of time. While this penalty can be problematic when it’s unanticipated, proper Medicaid planning takes it into account.
Do You Need Help with Medicaid Planning?
Medicaid planning can be very complicated, which is why it’s generally advisable to seek assistance from an experienced Medicaid planning attorney. Legal counsel from Kirshblum Taber PC can provide you with the guidance and support you need to secure the Medicaid long-term care benefits you need.
After all, long-term care of any kind is expensive. Depending on where you live in New York, you can expect to spend anywhere between $90,000 and $145,000 per year on care. Your actual costs will also depend on the kind and level of care you need, but this is just a glimpse at why so many turn to Medicaid when they need to afford long-term care.
If you need help, we’re here to listen and offer our support. If you’d like to learn more about how Kirshblum Taber PC can help, don’t hesitate to reach out to us today.