Planning Techniques to Help Gain Medicaid Eligibility
For older Americans seeking assistance with the costs of long-term care through Medicaid, income and assets must fit within the established guidelines. One of the most basic of the Medicaid guidelines is that you must spend down your assets before qualifying for state or federal assistance. Strict Medicaid rules are in place to prevent people from getting around the rules. However, numerous strategies are used to circumvent the rules.
5 Common Strategies Used to Qualify for Medicaid Without Spending Down Assets:
- Irrevocable Trust: An irrevocable trust allows loves ones to receive the financial benefits of your assets. In the simplest terms, you can use the irrevocable trust as a time capsule to pass assets on to loved ones after your death. Placing assets in an irrevocable trust means giving up ownership of the assets. The trust cannot be changed, revoked, or terminated, and it acts as a legal entity with ownership over all property in the trust. Assets placed in an irrevocable trust will often enable you to qualify for Medicaid since, legally speaking, you no longer own the assets. This method needs to be put in action far in advance (at least 60 months) of applying for Medicaid for the government to ignore the assets during the application process.
- Transferring Assets: In some cases, assets can be transferred to a loved one to help you qualify for Medicaid. Similar to creating an irrevocable trust, you must comply with Medicaid’s 60-month rule. If assets are transferred 60 months before applying for Medicaid benefits, the assets will not be counted towards the asset limitations determining eligibility.
- Investing in Your Home: Some people choose to concentrate their assets in their home as Medicaid rules exempt the family home for eligibility purposes, so investing funds in your home is a simple way to avoid spending your financial resources on long term care. Homeowners can use financial assets to pay off an outstanding mortgage, complete renovations or repairs to the home, or even purchase a new home that is worth more than the current home.
- Purchasing Exempt Assets: The primary residence is not the only asset exempt from Medicaid eligibility guidelines. Other assets exempt from Florida Medicaid eligibility guidelines include: one car (regardless of value with reasonable limits), a second vehicle seven years or older, personal property (with exceptions for unreasonable purchases), home improvements (any amount), life insurance (up to $2,500 total and combined cash value – death benefit is not calculated), 401k or IRA, assets that can be converted to income (for MMMNA purposes), assets that cannot be sold (for example a timeshare), prepay for funerals, and rental or income producing property.
- Purchasing a Medicaid Annuity: Married individuals often consider purchasing a Medicaid annuity. The Medicaid annuity can be useful if you or your spouse needs treatment in a nursing home or other long-term medical facility. Funds in a Medicaid annuity are not counted for Medicaid eligibility. Instead, the funds are treated as a non-countable income stream for the spouse who is not living in a nursing facility.
If you find that you are ineligible for Medicaid because you do not fall under their income or asset limitations, get in touch with one of the experienced Medicaid planning attorneys at Elder Solutions Law Firm today to discuss financial strategies that may be available to you.