Navigating Medicaid Planning for Long-Term Care: What You Should Know

Medicaid Planning

What is Medicaid Planning?

It’s common knowledge that long-term care is expensive. Although some of us may not need to rely on it, most Americans will have to utilize some form of long-term care as we age. How can we ensure that we can afford it or that we don’t utilize our entire life’s legacy to pay for it so we can leave some to our loved ones?

By utilizing Medicaid or other benefits, you can significantly reduce the financial burden of long-term care on you and your family. While ensuring you are eligible for Medicaid benefits can be challenging, there are specific actions you can take now to plan appropriately.

This article will discuss practical ways to plan for Medicaid and what steps you can take now by working with your estate planning attorney to provide peace of mind and a realistic strategy.

Spend Down

One of the strict requirements for eligibility for Medicaid is the income and assets threshold. If you are above it, you will not be eligible and will likely have significant bills due out of your assets.

There are ways to ensure that your income is below the threshold, including spending down your assets.

To spend down means to allocate some of the medical expenses that one incurs that wouldn’t be covered by Medicaid to their own out-of-pocket expense. Typical examples are paying for doctor visits, hospital bills, prescription medications, and more.

Time periods are set by each state, which can vary from one month to multiple, allowing individuals the ability to spend their own money on items that wouldn’t be covered by Medicaid, thereby reducing the income that they show and making them eligible for Medicaid resources.

Another option for spending money is to consider purchasing your burial plots or funeral expenses in advance. Funds can be set aside to cover these anticipated expenses, reducing your income.

In some cases, spending down can include updates to your home that may be required to aid in comfortable living, such as wheelchair ramps or other safety features.

This method can be tedious, as you must ensure that you spend down within the timeline to remain eligible, but with the right strategy in place, you can easily navigate this method.

Half a Loaf Planning

Another option to help aid eligibility for Medicaid is the Half a Loaf strategy. This method involves giving away assets, so they aren’t included in your income calculation. Some examples may be moving the assets to a trust, gifting them to children or grandchildren, and more. Funds can be used for items such as home repairs or paying off other debts, as well as to remove them from the Medicaid asset calculation.

One of the most appealing characteristics of this method is that the owner of the assets can retain some legal rights to the assets, should they need to utilize them in the future for further necessary care needs.

Reverse Half a Loaf planning is another angle to consider and involves things like purchasing a burial plot or other assets that won’t count against them for the Medicaid threshold.

Medicaid Compliant Annuities

Another option to speak with your estate planning attorney is the Medicaid Compliant Annuity option. By setting up an annuity effectively, you can remove the assets from the calculable Medicaid Eligibility requirements and disperse them for a more extended period so they won’t put you over the threshold.

Any excess assets you can’t move or spend down can be used to purchase an annuity that can be turned into an income stream that is spread out and avoids pushing you over the eligibility limit.

Do I Need Legal Guidance for Medicaid Planning?

While you may feel that you want to handle the Medicaid planning independently and without hiring a legal professional, the value that experience can bring to you and your goals is unmeasurable. By working with an experienced estate planning attorney, you can ensure that you are within the guidelines, remain compliant, and are legally pursuing Medicaid through the tools and resources that are available to you. Without experienced guidance, it’s challenging to navigate the intricacies of the Medicaid eligibility calculations, and you can inadvertently get disqualified for a minor oversight, which can then cost you a significant amount of money.

Don’t Leave Your Expenses to Chance

With the high (and rising) costs of long-term care, having a solid strategy in place to avoid those costs can mean the difference between sustaining your financial status now and leaving some of your legacy behind or facing financial distress at one of the most vulnerable times in our lives.

There are several options available to us to ensure that we are below the threshold to qualify for Medicaid and can lean on the assistance put in place as was intended.

If you or a loved one are facing significant long-term care costs or want to be proactive in ensuring you are eligible for Medicaid, contact our office today at (248) 997-4394. With decades of experience, we have a thorough knowledge of how to become eligible for the necessary benefits like Medicaid and what tools to use that will get you there.

Every household is different, and every person will have unique goals for the latest stage of their lives. We pride ourselves in helping our clients stipulate and achieve their goals through effective strategies. With several tools and resources available, we can customize your plan and allow you peace of mind while you enjoy this chapter of your life.

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