Estate planning is about more than what happens when a testator dies. It is also important for the protection of vulnerable adults later in life. Elder law matters, including Medicaid planning, require careful consideration from those preparing for or already enjoying their retirement years.
Older adults need to consider what might happen if they become incapacitated. They may also need to plan for the possibility of long-term care needs. Many people rely on Medicare and support provided by friends, neighbors and family members during their golden years. Eventually, they may require more extensive support.
Medicaid benefits may be necessary to pay for home health aides or a room in a nursing home facility. Advanced planning is critical for those seeking Medicaid. Otherwise, their assets and possibly even the home where they live could be at risk.
Medicaid eligibility depends on financial need
Medicare is an earned benefit that people acquire through years of gainful employment. Medicaid is a needs-based system that provides medical coverage to those without adequate income or personal assets. There are strict rules regarding how much countable property an individual can have and the amount of their monthly income when they apply for Medicaid benefits.
People can qualify despite owning a home and having tens or hundreds of thousands of dollars in accrued equity. However, any amount they receive in Medicaid benefits could be subject to estate recovery efforts after they die.
The Medicaid estate recovery program can make a claim in probate court seeking repayment for all payments made for the care of a Medicaid recipient. If there aren’t enough other resources in the estate to repay Medicaid for care costs, the courts might grant a lien against the primary residence of the deceased beneficiary. In some cases, families have to refinance or liquidate the home to repay the benefits an older adult received before they died.
Planning in advance can protect the home and the legacy of the older adult from estate recovery efforts. There are numerous strategies that people can use. They can take on co-owners long before they apply for Medicaid. They could transfer the property to a trust. The overall extent of their resources and their family relationships may influence the best solution for protecting a home as part of a Medicaid planning effort.
Taking steps at least five years before an older adult might require Medicaid coverage can help eliminate the risk of a penalty when they start receiving benefits. It may also be possible to limit or eliminate state recovery efforts with the right plan. Preparing in advance for a future Medicaid application can help people feel more confident as they prepare for retirement.