There’s a significant possibility that you’ll need long-term care at some point in your life. The costs associated with this care can be astronomical, too, costing you tens, perhaps even over a hundred thousand dollars per year. This can quickly evaporate the hard-earned wealth that you’ve accumulated, leaving you with little to nothing to pass down to your loved ones. If you want to avoid that kind of situation, then you should carefully consider whether Medicaid planning is right for you.
By properly planning for Medicaid eligibility, you protect your wealth while ensuring you qualify for government assistance in paying your medical bills. This can thus be a great way to ensure that you don’t have to use up your own resources to cover these extraordinary costs.
What tools can you use to engage in effective Medicaid planning?
There are several options available to you. You need to use those that are best suited to your situation so that you protect your assets as fully as possible. Here are some estate planning tools that you may want to consider:
- An irrevocable trust: With this type of trust, you give ownership over the trust assets to the trust itself. Since you no longer own the assets, they’re removed from Medicaid eligibility consideration. There is a five-year look back so any transfers must be made five years before applying for Medicaid.
- An annuity: With an annuity, you pay a single lump sum to an insurance company in exchange for them sending you a monthly check over a period of time, often for the rest of your life. If you have these payments made to your spouse, then they won’t be deemed countable assets for Medicaid eligibility purposes. This can ensure that you support your spouse appropriately without having to lose those assets to your long-term care needs.
These are just two of the Medicaid planning options that you may be able to utilize to qualify for Medicaid. Just remember that there’s a lookback period, so if you plan to spend down your assets, it’s better to start doing that sooner rather than later. Otherwise, you could end up facing a penalty period that leaves you on the hook for a significant amount of your healthcare costs. So, don’t hesitate to consider your estate planning options and act on those that position you for Medicaid eligibility.
Do you need more guidance creating your estate plan?
Although estate planning can seem rather straightforward, it can actually be quite complex if you want to customize your plan to get as much out of it as possible. If you think you need help figuring out the best way to approach your estate plan, then continue to read up on your options and how Medicaid is implicated. Don’t wait too long to act, as you never know when your health can take a turn for the worse, leaving you with extensive care that you didn’t expect.