Medicaid Planning and Asset Protection: Act Before It’s Too Late

What can be done now to prepare you for funding long term care in the future?

When it comes to estate planning and preserving your assets for future generations, it is imperative that you look ahead and take action before a problem occurs. In the case of Medicaid planning, the problem is that you or your spouse may need long term care in the future. If you plan ahead, you or your spouse could pass on your wealth, all while your medical care is paid or through Medicaid.

If you do not do any Medicaid planning and you do not enroll in a private long term care insurance program, you will have to use your assets to pay the bills if you or your spouse reaches a point where long term care is necessary. According to the Maryland Healthcare Commission, long term care can cost anywhere from $17,000 to $79,000 per year, making it likely to eat up a significant portion of your assets.

Medicare is the government health insurance program for those who are at least 65 years old or who are disabled. Medicaid is a health care program for those of low income, limited assets and who can meet other eligibility requirements. Medicare has limited benefits for long term care, while Medicaid pays for nursing home care and home health services for those who would otherwise be in a nursing home.

If your assets are more than the resource limit, youll be ineligible for Medicaid unless you “spend down” your resources below the limit. You can spend that money on anything, but you cannot give your resources away for less than fair market value. There is also a five year look back period to see if you gave away assets for less than fair market value during that time. If so, financial penalties will be imposed by blocking eligibility for a period of time. The penalties are assessed by dividing the value of what you transferred by the average monthly cost of a nursing home in your state.

If it will be more than five years before you need long term care, you may be able to transfer your assets into a trust which, if done properly, will allow you to benefit from those assets while still being financially eligible for Medicaid. If one spouse needs the long term care but the other does not, assets and income could also be transferred from the spouse applying for Medicaid to the one who is not, up to a certain point.

Given all of the complex rules, guidelines, laws and regulations, this is not a do it yourself area of law. If you have questions or concerns about paying for long term care, the Bethesda and Rockville, Maryland elder law, asset protection and estate planning attorneys at Longman & Van Grack can be reached at (301) 291-5027. Call to schedule a consultation today.