Wealth

The Oft-Ignored Component of Elder Care Planning

By Diana Palmieri

Most people do not plan properly when it comes to Medicaid. Americans are living longer; couple that with the fact that 80 million Americans will be over the age of 65 by 2040, and Medicaid planning should become a major facet of future financial and elder care planning for you and your parents. I’ve come up with some frequent Medicaid points below as a guide to general understanding, but it would be most prudent to consult a Medicaid attorney. Laws and individual situations can be quite complex, and an attorney specializing in this field will be well worth the money.

Here are some general concepts:

  • The journey with Medicaid begins with determining what assets are considered exempt and countable.  Exempt assets are what Medicaid will not include in the asset total to determine eligibility.  Countable assets can include CDs, brokerage accounts, and property that can be converted to cash.   Homes, vehicles, and insurance policies are examples of what could be exempt assets depending on certain qualifying criteria.
  • To qualify for Medicaid, the amount of countable assets cannot exceed $2,000 (not missing a zero!).
  • Medicaid has what’s called a “look back” period.   A look back period is the time frame where Medicaid looks to find those countable assets given or transferred away.  The period of time is 60 months (5 years).  Assets given away or transferred within this 60-month period can result in the applicants having a penalty period applied to their Medicaid assistance.  The penalty period simply means the applicants must wait before becoming eligible for assistance from Medicaid–and it’s calculated in time, not money.   They will have to use their own assets to pay for nursing home care until they get past that penalty period.
  • There is an income limit to qualify for Medicaid, but it varies by state.  The calculation used includes the federal poverty level, modified adjusted gross income, and other factors.
  • Just because one becomes eligible and receives Medicaid assistance does not mean it doesn’t have to be paid back.  One who receives Medicaid and then dies will have the government looking toward the estate for payback of nursing care.  However, with proper estate planning, which includes Medicaid, one might avoid Medicaid Recovery, possibly allowing assets to pass on to heirs.

Medicaid and Medicare are often confused.  To clear up some of that confusion, Medicare is an entitlement program that is paid for through payroll withholding.  Medicaid was designed to help people in need and is a form of social welfare.  Medicaid was created in part to pay for expenses pertaining to long-term health care expenses once an applicant’s funds and assets are exhausted.  Since rules and regulations vary by state (in some case even by county), it is very important to consult with an attorney specializing in this field.  I’m just skimming the surface with the above points, but there really is so much more to this type of planning.  For additional information, visit www.medicaid.gov

 

Diana Palmieri is dually registered with Vanderbilt Securities LLC and H Beck Inc., which are unaffiliated. Securities offered through Vanderbilt Securities LLC, member SIPC/FINRA/MSRB.