How to Protect Assets from Medicaid Spend Down?
Medicaid is not just for poor and low-income seniors. With the right planning, assets can be protected for the next generation, while helping a person become eligible for help with long-term care costs.
Nursing home costs could easily exceed $7,000 per month in most parts of Louisiana. That’s $84,000 per year for only one spouse in a nursing home. And statistics prove that one out of three elderly persons will wind up in a nursing home for at least a short time, possibly longer. You can preserve your hard-earned assets.
Medicaid was created by Congress in 1965 to help with insurance coverage and protect seniors from the costs of medical care, regardless of their income, health status or past medical history, reports Kiplinger in a recent article “How to Restructure Your Assets to Qualify for Medicaid.” Medicaid was a state-managed, means-based program, with broad federal parameters that is run by the individual states. Eligibility criteria, coverage groups, services covered, administration and operating procedures are all managed by each state.
With the increasing cost and need for long-term care, Medicaid has become a life-saver for people who need long-term nursing home care costs and home health care costs not covered by Medicare.
Meeting eligibility requirements are complicated and vary from state to state. A Louisiana estate planning attorney can help guide you through the process, using his or her extensive knowledge of Medicaid’s laws applying particularly to Louisiana. Mistakes can be costly—and permanent.
For instance, your home’s value (up to a maximum amount) is generally exempt, as long as you still live there or will be able to return. Otherwise, most states require you to spend down other assets to $2,000 per person or $4,000 per married couple to qualify. However, in Louisiana, there is the specter of “Medicaid Estate Recovery” which may apply in your case. In other words, there is a possiblity that your house can be claimed by the State of Louisiana after you die if you have spent time in a nursing home.
Transferring assets directly to other people, typically family members, is a risky strategy, and often the income tax liabilities generated by this approach are significantly more than the cost savings. There is a five-year look back period and if you’ve transferred assets, but you can still qualify. If the person you transfer assets to has any personal financial issues, like creditors or divorce, they could lose your property. So a trust is often the best bet.
Asset Protection Trusts, also known as Medicaid Trusts. These trusts can Protect Assets from Medicaid Spend Down. You may transfer most or all of your assets into this type of trust, including your home, and maintain the right to live in your home. Upon your death, assets are transferred to beneficiaries, according to the trust documents. Not just any trust will do. There are particular provisions that must be placed in the trust, and it should be drafted by an attorney specializing in estate planning.
Talk with your Louisiana estate planning attorney if you believe you or your spouse may require long-term care. Consider the requirements and rules of Louisiana. Planning in advance is the best means of protecting yourself and your spouse from the excessive costs of long term care.
To learn more, read: How Did COVID Push Medicaid Enrollment? and Can I Keep Assets and Still Be Eligible for Medicaid? and When Should I Consult with an Elder Law Attorney? and Why Should I Update My Estate Plan?