Medical care is expensive, and this gets even truer as people get older, especially if they develop a serious illness or have to move into a nursing home. In these situations, even people who have set aside a significant amount of assets for retirement may have a hard time paying for their medical care.
Medicaid is a federal program that helps low-income people pay for their medical care. It can be a valuable resource for older Americans who need help paying for their care. However, in addition to income limits, Medicaid also has asset limits for eligibility. This means that people with significant retirement savings may have trouble qualifying.
This issue can be addressed by taking preventative action during the estate planning process. Proper Medicaid planning can protect a person’s assets while still making them eligible for Medicaid benefits.
One common way to do this is to “spend down” assets, by investing cash in excluded assets. For example, a person might purchase a burial plot or spend money on improvements to their home.
Some people can also benefit from setting up a trust to protect their assets. Income directed into a properly established trust will not be counted as an asset for the purposes of qualifying for Medicaid.
It is important to remember that Medicaid planning is very complicated, and therefore it should only be undertaken with the assistance of an experienced estate planning attorney. Making a mistake in the planning can actually make matters much worse in the long run.
Source: The Sunday Dispatch, “Personal Finance Medicaid planning can increase chances of qualifying for aid,” Pamela Yip, April 20, 2013
For more information on Medicaid planning in New Jersey, please visit our website.