There are a variety of circumstances that may warrant someone becoming a Medicaid recipient. Individuals with lower incomes or disabilities often rely on this government-subsidized insurance coverage for their basic medical care or nursing home costs. These recipients can’t afford to lose this valuable insurance.
Perhaps one of the most important things for a Medicaid recipient to do as they age is to sit down and engage in estate planning. This may make all the difference between a recipient being able to continue receiving Medicaid as they age and losing access to those valuable benefits.
Why do you need to plan to continue receiving Medicaid?
Each state has an income threshold that you can’t exceed if you want to continue receiving Medicaid benefits. It’s $2,000 per month in most jurisdictions. There are also caps placed on how many additional assets you can own to remain eligible for Medicaid benefits. You’re generally limited to just a basic car, home, a funeral plan and life insurance policy. You may no longer be eligible for Medicaid if your monthly income or assets exceed these limits.
What can I do to preserve my eligibility for Medicaid?
The Internal Revenue Service (IRS) allows you to transfer up to $14,000 in assets to someone else to maintain qualify for Medicaid benefits. You may also be able to transfer your marital home or assets to your spouse. You’re generally entitled to retain some of the proceeds from its sale after your spouse’s passing without it affecting your eligibility for Medicaid.
Requesting the transfer of property instead of monthly alimony payments may also keep you eligible for Medicaid benefits. The same logic applies if you transfer your assets to a blind or disabled child under 21 or put them in a trust for someone under the age of 65.
Preserving your eligibility for Medicaid benefits
A look-back period of five years applies when you request Medicaid benefits. You may find that you’re not immediately eligible for benefits depending on when you received certain funds or turned over certain assets.
You may not have time to wait to qualify for benefits when the need arises. That’s why you’ll want to go ahead and start planning now for the future. You’ll ensure that the funds that you so desperately need are there when you need them most by doing so.