Medicaid Estate Planning
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As you age, you may be considering Medicaid to help cover long-term care and other health-related costs. Eligibility for Medicaid in Massachusetts (known as MassHealth) isn’t guaranteed, and it’s based on factors like your income and your assets.
One of the main criteria for determining eligibility for Medicaid is how many assets you have. If you’ve spent years saving money and acquiring property, you might have too many assets to qualify for Medicaid. Instead of saving these assets to pass on to your children, you may have to spend them down until you reach the Medicaid eligibility limits.
At The Law Offices of Kimberly Butler Rainen, we want to help prevent this from happening. We know how important it is to have assets to pass down to your family, which is why we offer Medicaid estate planning. Our Medicaid asset protection lawyer can help you shelter assets from Medicaid so that you don’t miss out on the healthcare benefits you need.
How a Trust Protects Your Assets from Medicaid
Paying for long-term care is expensive, and Medicaid was created to help people who are in need of government assistance get nursing home care. But just because you have assets doesn’t mean you should be prevented from getting financial assistance.
Through an estate planning tool known as a trust, you can protect your assets from Medicaid and retain them for your family’s use. When you transfer your assets into an irrevocable living trust, they are no longer assigned to you as an asset — they become property of the trust and legally owned by the trustee. That means you may be able to bring down your personal asset level enough to qualify for Medicaid without having to give up your assets completely.
When we create your trust, we determine how your assets are used and distributed. To fully protect them, your trustee can’t be able to distribute the assets to you. Otherwise, Medicaid will consider the assets yours and you won’t be able to qualify for healthcare benefits. However, trustees are permitted to distribute income, such as rental income or dividend income, that is generated from the assets, and this won’t affect your eligibility. We’ll make sure to craft your Medicaid estate plan so that your assets are fully protected.
What Assets Can You Keep on Medicaid?
While putting assets into a trust can help make you eligible for Medicaid, it does limit the amount of liquid assets you have outside of the trust. Because you may want to retain access to some funds, you should carefully consider which assets to protect with an irrevocable trust.
For instance, you may want to keep cash or investments, but put any of your real property into the trust. This way, you can still access income from the real property and have access to your liquid assets. Having access to cash and other liquid assets may be a wise choice in case you need to pay out of pocket for a healthcare facility.
As a Medicaid asset protection trust lawyer, we know these decisions can be hard to make. That’s why we take the time to go through each of your assets and help you determine which to protect.
How Do I Protect My Home from Medicaid?
Your home is one asset that can be protected from Medicaid. With a properly executed irrevocable trust, you can transfer your home into the trust so it’s no longer a countable asset for MassHealth and reserve your right to live there for your lifetime.
Under MassHealth rules, you must transfer your home into an irrevocable trust at least five years before applying for Medicaid (this is known as the five-year look-back rule). MassHealth looks at five years of income and assets when determining eligibility, so you want to make sure that you didn’t transfer any assets (whether your home or another asset) within five years of applying for Medicaid.
If you did transfer within five years of applying, you may be penalized by a period of disqualification for Medicaid. This is why it’s so important to start your Medicaid estate planning early and with the help of an experienced Medicaid planning attorney.
What Assets Are Exempt from Medicaid Spend Down?
Medicaid divides assets into two categories: countable and exempt. If an asset is countable, it must be liquidated and used toward paying for nursing home care before you can get MassHealth benefits. This is known as spending down your assets. Countable assets that must be spent down include bank accounts, retirement accounts and a second home.
If an asset is exempt, it is not taken into consideration when determining your eligibility for Medicaid and you don’t need to spend it down. In Massachusetts, exempt assets include:
- Personal items and household goods
- A home worth no more than $858,000, as long as you’re receiving long-term care at home or a spouse is residing in the property while the other spouse is receiving Medicaid in a nursing home.
- One vehicle if it’s used for your healthcare treatment or employment, was modified to accommodate a disability, or is the primary vehicle of your spouse
- Money saved for a funeral and burial, up to $1,500
- Life insurance policies for you and your spouse of up to $1,500 each
Under Medicaid’s community spouse resource allowance, a spouse can currently keep up to $128,640; however, this amount is adjusted annually. The allowance ensures that spouses have the means to support themselves while their spouse receives nursing home care.
Determining which assets you must spend down and which are exempt can be confusing. Our Medicaid asset protection lawyer will go through each of your assets with you to determine which you can hold on to and which you need to spend down to meet Medicare eligibility requirements.