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How Medicaid planning can protect assets

On Behalf of | Oct 5, 2022 | Medicaid |

People are often worried about the cost of living in a nursing home, an assisted living center or some other expensive living situation as they age. They know that they have a lot of financial assets they’ve been saving up over the course of their life, and they want to pass those assets on to their children. However, they’re worried that the cost of long-term care is going to completely devour those funds.

This can happen if you are not careful, and there are different ways to address it. Some people take out specific insurance policies, for example. But one of the easiest things you can do to protect those assets is just to plan in advance. With the proper estate plan in place, you can utilize your assets, retain your eligibility for Medicaid and pass more of what you own on to your children.

Are you eligible?

Medicaid can pay for a nursing home. Programs like Medicare do not do this. This makes Medicaid an attractive option, especially as costs keep going up.

If you’re using Medicaid, however, there is a financial eligibility requirement. Essentially, you can have too many assets so that you don’t qualify.

Many people don’t realize this and they have to spend down their assets until they do qualify again. But this means that the assets are lost and they are not able to pass them on to their children.

By planning in advance, you may be able to create a trust that will hold those funds so that they no longer belong to you. When you pass away, the trustee can transfer those assets to your heirs. But, prior to that, you will still have fewer assets than you would if those remained in your possession. You may qualify for the financial Medicaid benefits that can help you pay for the nursing home.

A balancing act

As you can see, planning for the future is often a balancing act as you try to determine what costs you will have and what you want to do for your family. Make sure you are well aware of the legal options at your disposal.