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Top 3 Benefits of Medicaid Planning

Estate Planning

Medicaid Planning

Long-term care services are only available for short stints through Medicare and private insurers. So what will happen if you are in the 70% of those 65 and up who will need long-term care? Learn the top benefits of Medicaid planning in North Carolina and find out how you can qualify for Medicaid without losing your home or assets.

Shielding Your Assets From Medicaid Eligibility Standards

Medicaid is a joint federal and state program that provides financial support for eligible individuals requiring long-term care. A person can apply for Medicaid coverage of a nursing home or personal care at any time, but the application process requires extensive documentation of all income and assets.

However, there are ways to qualify for Medicaid coverage while still benefitting from ample assets. The key is making Medicaid plans early. When you do Medicaid Planning with your attorney at least five years before you need Medicaid coverage, you can prevent assets from disqualifying you from coverage.

Planning for Medicaid Coverage of Long-Term Care 

An irrevocable trust works to provide long-term care services for a Medicaid recipient by shielding assets from the eligibility process. An irrevocable trust agreement is an effective planning tool for individuals who wish to protect their assets by providing for family members (or themselves) while also qualifying for Medicaid benefits.

You cannot modify the terms of the trust once created. The primary goal in creating an irrevocable Medicaid trust is to use Medicaid resources to pay for long-term care services while keeping assets safe from a Medicaid spend-down to qualify for those benefits.

An irrevocable trust allows you to transfer asset ownership into a separate legal entity. However, typically you retain the right to receive the income generated by your trust. (Just ensure with your attorney that any income you receive will be under the Medicaid eligibility limits.)

An irrevocable Medicaid trust is an effective way for individuals to protect assets from the Medicaid spend-down process to gain eligibility for long-term care coverage while retaining the use of their assets.

Common Medicaid Planning Mistakes 

One common mistake in a Medicaid trust creation is naming yourself as a trustee. Creating an irrevocable trust but retaining control as a trustee could prevent your assets from being excluded in the Medicaid eligibility assessment. Since your attorney designed an irrevocable Medicaid trust to shield your assets from Medicaid, any type of retained control over those assets would render it ineffective for this purpose.

Another common mistake is setting up an irrevocable Medicaid trust after the 5-year look-back period. Medicaid considers all assets you own that you did not place in the irrevocable Medicaid trust at least five years before you need Medicaid coverage. 

For example, if you transfer ownership of your car(s) to the irrevocable trust now, but you owned it for two years before needing Medicaid, they would consider the car an asset during their financial eligibility assessment.

Benefits of Medicaid trust planning for coverage of long-term care expenses include:

  • The trust shields your assets from the Medicaid spend-down process.
  • The trust allows you to retain use of your assets for an extended time while planning how they will benefit you after you can no longer care for yourself.
  • After establishing an irrevocable trust, it can last as long as you live. There is no immediate pressure on family members to decide how you will receive care in your later years.
  • You can often use income generated by your trust assets without impacting eligibility for benefits during your own lifetime. It is crucial to ensure that any income from the irrevocable trust does not exceed your income limits for Medicaid eligibility though.

Funding Your Medicaid Trust in NC

You can place all or some of your assets into your Medicaid trust. However, whatever you leave out can be counted against you for Medicaid eligibility in NC. For example, if you leave your savings account out of the trust and it is worth $120,000 when Medicaid assesses your eligibility, they would consider your account against your asset limit for eligibility.

However, Medicaid does have allowances for specific items that they do not count against your eligibility. You may own a home in NC worth up to $636,000. For home exemption, you must live in it or have the intent to return. Other exemptions include many types of medical expenses. 

Funding your trust depends on state laws and what you own at the time. You can use cash or investable assets such as stocks to fund a Medicaid irrevocable trust. Funding your trust at least five years before you will need Medicaid is of utmost importance. Transferring assets in the five years before you need Medicaid assistance results in Medicaid counting those assets against you for eligibility.

You Need a Qualified Estate Planning Attorney 

Contact us at Cape Fear Law to create an irrevocable Medicaid planning trust. Our focus on estate planning means we have the insight and knowledge to help you understand the more complex legalities of creating a trust. We help you avoid the Medicaid spend-down and losing your assets and property. Instead, keep your assets secure and leave an inheritance for your loved ones while also taking care of your own future.

Contact us today to get started making your Medicaid plans.

 

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