How Can Medicaid Planning Help Protect My Assets?

Knoxville Medicaid planning attorneys

Asset protection is an important estate planning goal for many people. If you are one of them, you should also consider including a Medicaid planning component in your comprehensive estate plan to ensure that valuable assets are not lost because of the need to qualify for Medicaid during your retirement years. The Knoxville Medicaid planning attorneys at Stivers Law explain how Medicaid planning can help protect your assets.

Understand the Medicaid Program

Medicaid is predominantly funded by the U.S. federal government; however, the individual states have the option to supplement federal funds. Although Medicaid is a federal program, it is administered by the individual states. As such, both the eligibility criteria and the benefits provided to eligible participants will vary somewhat from one state to the next. Generally, states offer Medicaid to low-income families, pregnant women, children, and the disabled and the aged.

The Long-Term Care Reality

Although you may prefer not to dwell on it, there is a strong possibility that you, or a spouse, will need long-term care (LTC) at some point during your retirement years. When you reach retirement age, around age 65, you will already stand a 50 percent chance of eventually needing LTC at some point before the end of your life. Every year that passes, those odds go up. By age 85, your likelihood of needing LTC will have increased to a 75 percent chance. The likelihood that you (or a spouse) will need to pay for LTC in the future is what creates the need to incorporate Medicaid planning into your estate plan now.

The Cost of Long-Term Care

As a retiree, you will probably rely on Medicare to cover most of your healthcare expenses. Unfortunately, Medicare will not pay for LTC. If you retain private healthcare insurance, that policy also likely excludes coverage for LTC. For many seniors, that leaves paying out of pocket for LTC or turning to Medicaid for help because Medicaid will pay for LTC. At an average yearly cost of around $115,000 in Florida (as of 2022), paying out of pocket could significantly deplete your retirement nest egg. Medicaid can help; however, your nest egg could also be threatened by the need to qualify for Medicaid.

Qualifying for Medicaid

Medicaid uses both an income and an asset (countable resources) test when determining eligibility. You cannot own “countable resources” valued at more than the program’s limit ($2,000 for an individual) or you will be forced into Medicaid “spend-down”.  In short, this means you will need to use those “excess” resources to pay for LTC until the value drops below the program limit. Transferring asset in anticipation of the need to qualify for Medicaid is not an option because Medicaid also uses a 60-month “look-back” period. Assets transferred for less than market value during the 60-month period prior to your application may trigger a waiting period during which time you will be responsible for paying your LTC expenses.

Medicaid planning is aimed at avoiding both the spend-down and look-back problems faced by applicants. Medicaid planning refers to the use of legal strategies and estate planning tools designed to ensure your eligibility for Medicaid while protecting your hard-earned assets. The details of your Medicaid plan will be as unique as your overall estate plan; however, a common Medicaid planning strategy involves the creation of a Medicaid trust. Once assets are transferred into a Medicaid trust they become trust property and are no longer considered part of your “countable assets” for Medicaid eligibility purposes. Talk to your estate planning attorney about incorporating a Medicaid planning component into your comprehensive estate plan.

Contact Knoxville Medicaid Planning Attorneys

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about how Medicaid planning can help protect your assets, contact the experienced Knoxville Medicaid planning attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.

Author Bio

Justin Stivers is the founder and managing attorney of Stivers Law, an estate planning firm specializing in wills, probate, trust administration, and financial risk management services. Justin’s approach goes beyond just creating legal documents. From aligning investments with estate plans to ensuring comprehensive insurance coverage, he safeguards a client’s legacy from unforeseen circumstances. His commitment extends beyond individual transactions, fostering lifelong partnerships to provide ongoing support and guidance.

With an impressive track record, Justin is licensed by the Florida and the Tennessee State Bars. His professional portfolio boasts Series 65 registration as a Registered Investment Advisor, the Wealth Management Specialist™ designation, and a 2-15 License for Health, Life, and Annuities. His dedication to excellence has earned him positions like Board Member of the Estate Planning Council of Greater Miami, Business Eagle Member of the Florida Justice Association, and active membership in esteemed organizations like the American Academy of Estate Planning Attorneys.

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