Medicaid & Asset Protection Planning
Medicaid is a government program that provides healthcare coverage including costs for nursing facility services, doctor visits, rehabilitation services, for eligible individuals. These long-term care costs can easily deplete someone’s life savings. Medicaid can cover the costs of long-term services, however, Medicaid eligibility rules are complex, and failure to plan properly can result in substantial financial losses. With the right asset protection plan, ELP can help legally safeguard your assets from potential creditors, lawsuits, and other financial risks.
Medicaid and Long-Term Care
Long-term care refers to the services and support provided to individuals who require assistance with activities of daily living, such as bathing, dressing, and eating, due to a chronic illness or disability. Long-term care services can be provided in a variety of settings, including nursing homes, assisted living facilities, and in-home care. These services cost thousands of dollars a month!
Medicaid can help cover the costs of long-term care services for individuals who meet certain eligibility requirements. However, Medicaid has strict asset and income limits, and individuals must spend down their assets to meet these limits before they can receive Medicaid benefits. With proper planning, individuals can legally protect their assets and still qualify for Medicaid benefits. ELP will advise you on how to meet the Medicaid medical, technical, and financial eligibility while preserving the maximum amount of assets for you and your family.
Asset Protection Services
Asset protection strategies can help individuals and families protect their assets from creditors, lawsuits, and other financial risks. Here are some examples of asset protection strategies that can be used in Medicaid and long-term care planning:
1. Gifting Program: A gifting program involves transferring assets to family members or trusts over time, with the goal of reducing the individual’s assets and income to qualify for Medicaid. However, there are strict rules governing gifting, and it is important to work with an attorney to ensure that your gifting program is in compliance with Medicaid regulations.
2. Medicaid Compliant Annuity: A Medicaid compliant annuity is a financial product that can help individuals convert countable assets into an income stream that is not counted towards Medicaid eligibility. An annuity can be an effective way to protect assets while still qualifying for Medicaid benefits.
3. Special Needs Trust: A special needs trust is a type of trust that is designed to provide for the needs of an individual with a disability or chronic illness while preserving their eligibility for government benefits, such as Medicaid.
4. Irrevocable Trust: An irrevocable trust is a legal arrangement that allows individuals to transfer assets out of their estate and into the trust, where they are protected from creditors and other financial risks. An irrevocable trust can be an effective tool for protecting assets while still maintaining some degree of control over them.
5. Contribution Agreement: A contribution agreement is an agreement, commonly used between parents living in an adult child’s home, where the parent advances money to their adult child for the pro rata share of household expenses and reimburses the adult child for money advanced on the parent’s behalf. This strategy can rebut the Medicaid gift penalty and assist in qualifying for Medicaid benefits.
6. Caregiver Agreement: A caregiver agreement is a legal document that outlines the terms and conditions of an arrangement between an individual and their caregiver. In the context of Medicaid and long-term care planning, a caregiver agreement can be used as an asset protection strategy to compensate a family member or friend for providing care to the individual in their home.
Under Medicaid rules, an individual’s income and assets must be below a certain threshold in order to qualify for benefits. However, compensation paid to a caregiver under a valid caregiver agreement is considered an allowable expense and is not counted as income or assets for Medicaid purposes.