Since 1990, health care expenditures in the United States have increased by more than 300 percent, reaching an annual total of approximately $2.5 trillion. This is more than eight times the $253 billion spent on health care in 1980.
Considering the aging American population, no one expects these costs to go anywhere but up. It is more important than ever to plan well for the possibility of a major health event later in life. With adequate forethought, and the proper help, Medicaid planning can help you hang on to the assets you have worked your whole life to collect.
Legal Tools That Can Preserve Wealth in Medicaid Planning
Medicaid is a joint federal and state program that provides financial assistance for medical expenses to qualifying low-income individuals. In fiscal year 2010, 64 percent of Medicaid spending was for older Americans (those age 65 and older) and people with disabilities. Medicaid is the single largest payer of nursing home bills in the United States.
In order to be eligible for Medicaid, your total assets as well as your monthly income must be below a certain level. However, depleting savings and other resources in an effort to qualify for medical assistance is far from desirable. Medicaid planning is a strategic rearranging of assets that can help individuals retain their hard-earned wealth while still qualifying for the medical care assistance they need.
In determining whether you qualify for Medicaid, state authorities may only count income and assets that are legally available to you to pay for medical bills; there are a number of exempt assets that may not be counted. The list of exempt assets varies by state, but usually includes the family home, one automobile, prepaid burial expenses and term life insurance. Converting countable assets to exempt assets (for example, using savings to pay off a home mortgage or make home improvements) is one way to shelter your assets.
Other legal tools can ensure your wealth goes to loved ones instead of into the pockets of health care providers. Property placed in an irrevocable trust, when named to a proper beneficiary and carrying proper terms related to distribution, will be preserved. Annuity products and life insurance policies can also help you provide for your family while still qualifying for Medicaid.
Get Help from a Qualified Attorney
Although Medicaid planning can be highly beneficial, it is also very complex, and the risks are great: when applying for Medicaid, the state can look back at your finances for several years, and will make you wait to collect Medicaid if they uncover transfers of countable assets for less than fair value. In addition, the state may place a lien on your property or seek contributions from your estate after you die in order to obtain reimbursements for Medicaid expenditures.
The key to a successful Medicaid planning experience is consulting a qualified estate planning attorney, and doing it early. Your attorney can help you shelter your assets, provide for your loved ones and get the medical care you need.
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