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Medicaid Planning for Long-Term Care

What Is Medicaid Planning?

Medicaid planning is a part of long-term care and estate planning that helps prepare you for your Medicaid application. When you prepare to apply or reapply for benefits, you receive assistance in the planning to increase the likelihood your application will be accepted. An attorney can work with you to file and prepare your application and/or restructure your finances to ensure you meet the application requirements and limitations.

Why Medicaid Planning Is Important for Your Long-Term Care Plan

Through Medicaid, many people cover the costs of assisted living or home healthcare. If you qualify for Medicaid, you can save a lot of money and ensure you get the care you need concerning long-term care. Without any planning, you may be forced to try to cover the rising costs of care on your own, and/or you may lose assets and income that you planned to leave to loved ones.

While you may not believe that you will ever need long-term care, data suggests that “someone turning 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years (LongTermCare.gov).” Long-term care costs can be very pricey. According to the Ohio Department of Insurance, the average cost of long-term care is about:

  • $93, 805/year for a private room
  • $52,065/year for care in an assisted living facility
  • $52, 624/year for home health aide services (for just 44 hours a week)

In addition to saving money and working to ensure you are accepted into the program, Medicaid planning (with the help of a professional) is also beneficial for the following reasons.

  • The eligibility requirements are complex and can be difficult to understand and even small errors can result in an application denial. To avoid making errors and having to reapply, you (and your loved one) can get assistance.
  • You can save time and money by enlisting the help of a professional as they have more experience and a better understanding of the application and requirements. This can be especially helpful if you or your loved one need Medicaid benefits as soon as possible (because they have already entered or will soon be entering a long-term care facility).
  • You can protect more of your assets from the Medicaid estate recovery program.
  • You can better understand how to ensure a spouse or partner can remain living at home with sufficient financial resources—specifically in instances where only one spouse needs long-term care.
  • You can have more peace of mind during the application process. Instead of worrying about your assets or a denial, you can trust your attorney to handle your concerns and work in your best interest.

Medicaid Income & Asset Limitations

To qualify for Medicaid, you cannot exceed the income or asset limits. The specific income limits change based on whether you are single or married; the limitations also change for married couples depending on whether both spouses are applying. (Please be advised that these figures are subject to change.)

  • For a single applicant, the income limit is $2,523/month, and the asset limit is $2,000.
  • For a married applicant with both spouses applying, the income limit is $5,046/month, and the asset limit is $3,000.
  • For a married application with only one spouse applying, the income limit is $2,523, and the asset limit is $2,000. The applicant’s spouse’s asset limitation is $137,400.

To ensure they meet the limitations and protect their income and assets, many people create trusts. We will discuss this in detail later.

Income includes any money received from any source, including but not limited to:

  • Pension payments
  • Social Security Disability Income
  • Social Security Income
  • Stock dividends
  • IRA withdrawals
  • Investment property income

Assets include but are not limited to:

  • Savings and checking accounts
  • Stocks and bonds
  • Cash
  • Investments
  • Real estate properties (that are not your primary residence)

Assets that are eligible for exemption include but are not limited to:

  • Household items
  • A car
  • Personal belongings
  • Irrevocable burial trusts

Typically, your primary residence is also considered exempt from the asset limit; however, you must live in the home or plan to return to the home, and the home equity interest cannot exceed $636,000. It is also important to note: Even if your home is exempt from the asset limit, it may not be exempt from the estate recovery program, which aims to compensate the Medicaid agency after the death of a long-term care beneficiary. You should speak with a qualified attorney to learn more about the recovery program and how to protect your home.

What Is a Qualified Income Trust (QIT)?

If your income exceeds the cap, you can still qualify by creating an irrevocable trust, a Qualified Income Trust (also referred to as a Miller trust). The income you place within the trust is protected and not included in your income calculations. Any excess income can be deposited into the trust. Before creating a trust, you should consult with an experienced attorney as:

  • The terms of an irrevocable trust cannot be undone easily.
  • The income is now owned by the trust.
  • The QIT must be properly set up and managed.
  • An attorney can best advise you on whether a QIT is the right option for you.

What Is a Medicaid Asset Protection Trust?

A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust that protects your assets from recovery and the application limits, and you can still receive payments from income-producing assets. Rather than create a trust, some people transfer property and assets to their friends, family, or others. Creating a MAPT is a safer option, though, because:

  • You may be subject to gifting penalties.
  • Your property or assets will not be safe in the event the new owner gets divorced or sued
  • Your property or asset income may not be properly handled or managed.
  • Medicaid has a five-year lookback period. Any transfers will be investigated to ensure the sale or trade was for a reasonable value. While MAPTs are still subject to the lookback, you risk having your application denied if you make unexplained transfers. Also, be advised that the IRS gift tax emption does not apply as it relates to Medicaid applications.

Contact Bridges, Jillisky, Weller & Gullifer, LLC Today

If you want to qualify for the Medicaid program, it is essential that you work with our firm to plan for the future. Your income and assets will not cover your long-term care, but they may also disqualify you from receiving Medicaid.

Our firm is known for providing our clients with high-quality, individualized legal counsel. If you need help preparing for long-term care, we are here to help. Once you retain us, we can work with your best interest in mind and help you:

  • Understand your best options based on your financial situation
  • Help you create trust(s) to help you qualify and protect assets

While everyone can benefit from Medicaid planning, you should especially consider scheduling a consultation if you are:

  • A married couple with either one spouse applying or both spouses applying
  • A loved one trying to ensure your family member receives quality care and protect family assets from recovery
  • Someone with a complicated financial situation

Learn more about our estate planning services today online or at (937) 403-9033. Our estate planning attorney Kimberly Cutler is here to help you prepare for the future and ensure you have a plan for any needed long-term care.