As you look ahead to your golden years, you may be concerned about the rising costs of long-term care and how to pay for it without depleting your life savings. Medicaid planning offers a solution, but figuring out the complex rules and regulations on your own can be challenging.
At the Elder Planning & Elder Care Firm of Michigan, our experienced Howell MI elder law attorneys understand the nuances of Michigan's Medicaid system. We’ll work closely with you to develop personalized strategies to help ensure your eligibility for much-needed long-term care while also protecting your assets.
Understanding Medicaid's Financial Eligibility Requirements
You must meet strict income and asset limits to qualify for Medicaid in Michigan. As of 2023, individuals applying for long-term care Medicaid can have no more than $2,000 in countable assets. This low threshold may lead you to believe you must spend down your life savings before Medicaid will help.
However, not all assets are counted when determining Medicaid eligibility. With proper planning, you can structure your finances to maximize the resources you keep while still meeting Medicaid's requirements. Exempt assets may include:
- Your primary residence (up to a specific equity value)
- One vehicle
- Personal belongings and household furnishings
- Burial spaces and pre-paid funeral plans
- Life insurance policies with a face value under $1,500
Our knowledgeable elder law lawyers will assess your unique financial situation and identify opportunities to protect your assets within the legal boundaries of Medicaid law.
Making Sense of Medicaid's 5-Year Lookback Period
One of the most critical aspects of Medicaid planning is understanding and working within the 5-year lookback period. The purpose of the lookback period is to prevent people from simply giving away assets or selling them under fair market value to qualify for Medicaid.
When you apply for long-term care Medicaid in Michigan, the state reviews your financial transactions over the past 60 months. If improper transfers are discovered, you may be subject to a penalty period that delays your eligibility. Types of asset transfers that could violate the 5-year lookback period and trigger penalties include:
- Giving substantial gifts to family members or friends. Any gifts or asset transfers made within five years of applying for Medicaid may be considered an improper transfer.
- Selling assets for less than they're worth. Selling your assets for less than fair market value could make you ineligible for Medicaid. For example, selling a home to a child for a nominal amount could be viewed as a gift and violate the lookback rule.
- Paying for services or care under the table. Compensating family members for caregiving without a formal Medicaid-approved agreement or paying for services in cash may also raise red flags during the lookback period.
However, some asset transfers are permissible, such as:
- Transfers to a spouse
- Transfers to a blind or disabled child
- Transfers of your home to a caregiver child who lived with you for at least two years prior to your Medicaid application, if they provided care that kept you out of a nursing facility
The key is to plan as early as possible and work with a knowledgeable lawyer who understands the intricacies of the lookback period. The Elder Planning & Elder Care Firm of Michigan team can help you make strategic asset transfers that fall within Medicaid's rules. Our legal team may also help you qualify for Medicaid if you need nursing home care.
How to Protect Your Assets via Medicaid Planning
Our elder law lawyers can use several effective Medicaid planning strategies to help you protect your hard-earned assets while still qualifying for benefits. Examples of asset protection strategies we may assist you with include:
- Converting assets to exempt assets. You can reduce your countable assets without violating Medicaid rules by investing in exempt resources like home improvements, a car, or personal belongings. Our attorneys will identify which exempt asset investments make the most sense for your situation.
- Irrevocable trusts. Transferring assets to an irrevocable trust can remove them from your countable resources for Medicaid eligibility. Our team can determine if this type of trust is right for you.
- Making permissible transfers. Certain asset transfers are allowed under Medicaid rules, such as transfers to a spouse or disabled child. We'll assess your family situation and financial goals to identify permissible transfers that optimize your Medicaid planning.
The Importance of Personalized Medicaid Planning Guidance
No two Medicaid planning situations are alike. Your best strategies will depend on factors like age, health, marital status, assets, and family dynamics. Cookie-cutter approaches simply won't provide the level of protection you need and could keep you from being eligible for Medicaid when you must go into a nursing home.
At the Elder Planning & Elder Care Firm of Michigan, we take a personalized approach to every case. Our compassionate Howell Medicaid planning lawyers will take the time to get to know you and understand your concerns and objectives. We’ll then craft a tailored plan to help you qualify for benefits while preserving the maximum assets allowed under the law.
