Medical coverage will probably become increasingly important for those who are entering their retirement years. For many seniors, Medicare helps pay for their standard medical expenses. This coverage, however, does not extend to certain kinds of necessary long-term care. Under these circumstances, individuals 65 and older often turn to Medicaid in order to pay for these critical services. However, in order to qualify a Medicaid applicant is not permitted to have extensive assets. For those who have retirement savings and a personal residence, this leaves the question: How do you qualify for Medicaid without having to sacrifice all that you have built?
For a Michigan resident to qualify for Medicaid, the applicant must be 65 or older, have a certain type of disability, or have blindness. There are significant limits on the value of assets the applicant may have in order to qualify for Medicaid. For instance, a Medicaid recipient can have no more than $2000 in resources in order to be eligible and can only keep a very limited amount of funds per month for their own use once they qualify. Essentially, a person receiving Medicaid is expected to devote most of their resources to pay for their medical care.
When an applicant has resources greater than allowed in order to qualify for Medicare they will often will spend down the excess amount in order to qualify for the program. Some assets such as your primary residence, your personal vehicle, and household goods may be exempt from the calculation of the eligibility requirements. However, there are limits on the amount of home equity you can have, and your retirement account may be counted as an asset depending on your ability to withdraw money from the account. Additionally, the Medicaid program does often require reimbursement upon the death of a recipient. This can mean that when you die, the federal government may place a lien on your home in order to recover your Medicaid costs.
In an effort to qualify people sometimes believe they can merely give their assets to a close friend or relative. However, Medicaid has a five year “look back” provision which allows the program to examine all of your financial transactions for the prior five years. If the transactions are not handled properly, you may be disqualified from receiving Medicaid for a certain period of time.
The good news is that there are steps you can take in order to protect your assets while remaining Medicaid eligible. For instance, there are certain kinds of trust which you can create in which your assets are no longer considered to be your possessions, but you may still receive some benefits from them such as being able to pay medical bills with the proceeds. Other types of trust permit you to move assets out of your possession into a trust which can be used to pay funeral expenses. There are also provisions which permit some assets to be transferred to your spouse which allows them to remain within your family and not count against your eligibility. Annuities are also an option under some conditions. There are also other spend-down options which will not affect your eligibility.
Medicaid planning is complicated, and the rules and laws pertaining to qualifying for this program frequently change. To prepare and protect your home and assets it is vital that you seek the advice of a knowledgeable and experienced Medicaid planning attorney. Our office has experience with Medicaid planning and can help. Please contact us online or by phone if we may be of assistance.