Planning for old age? Don’t forget Medicaid

You’re getting older, and one thing you want to start taking care of is your estate plan. One aspect of your estate plan that you may want to talk about with your attorney is Medicaid planning. Medicaid planning helps you prepare your estate in a way that will allow you to leave behind assets for your loved ones while still meeting the qualifications to obtain Medicaid.

Medicaid is government-sponsored health insurance coverage for low-income individuals. You need to qualify based on need. So, if your estate is worth too much or you have too many assets, you may not be able to obtain Medicaid. Instead, you’ll need your own health-insurance coverage or to pay out of pocket for your health care.

How can estate planning help you qualify for Medicaid?

The main way is through reducing the value of your estate and taking assets out of your name before you need Medicaid. For example, if you set up an irrevocable trust for your home, your home will be set up to be passed on to someone else when you pass away, and it will also be taken out of your name. The full value of the property will no longer be included when calculating your assets. Similarly, if you have a large amount of money in your bank accounts, you could add those funds to a trust or pass the money on to relatives to help reduce the value of your estate.

You need to do this carefully, so you will need to discuss the specific rules that apply and that will still allow you to qualify for Medicaid. If you transfer assets too closely to when you apply, you could be hindered by a look-back period, which is something your attorney will work to help you avoid.