A unique trend is emerging among Baby Boomers as they plan for retirement. Many are now attempting to position themselves through a process known as Medicaid planning to be more likely to qualify to receive Medicaid while still preserving their assets.
Medicaid, a program that is run by the federal and state governments, is a program that assists the poor in paying for health care. While the state government determines eligibility, the federal government reimburses a portion of state Medicaid expenditures. Medicaid is not the same as Medicare, federal health insurance that covers people who are over 65 and disabled people. Eligibility for Medicaid depends on an applicant’s income and resources.
The Medicaid planning process involves taking a client’s income and assets that would be counted in determining Medicaid eligibility and spending it on expenses that do not count against Medicaid eligibility. There are certain tools that can help with Medicaid planning. Congress established a spousal safeguard to prevent a couple from becoming impoverished in the event that one of the spouse’s needs to move to a care home. Medicaid has spousal impoverishment provisions, which protect a portion of a couple’s combined resources for the spouse who is still residing at home. People can direct a portion of their pension or Social Security income into a Miller Trust, which will help reduce the amount of income that is considered in determining Medicaid eligibility.
Medicaid planning can be extremely complex. People commonly make mistakes that should be avoided like selling their home, or simply giving away money and assets without seeking professional advice. The planning process should be entered into with the expert counsel of an Elder Lawyer to avoid making potentially costly mistakes.
Source: Times Union, “Medicaid planning is complicated,” Pamela Yip, April 20, 2013