As you age, it's likely that your health care needs will increase. You may suffer more severe complications of a chronic disease, or you might have a condition like dementia that necessitates in-home care. The costs of such health care can be astronomical over time, and you don't want to spend your life savings on your care – leaving nothing behind as a legacy for your children and grandchildren. For this reason, an estate planning attorney may recommend Medicaid planning.
What Is Medicaid Planning?
Medicare and Medicaid are both government programs that assist low-income individuals in paying for necessary health care. You must have income and assets below a certain threshold in order to qualify for this assistance. If you've been frugal your whole life, or made valuable investments, your net worth might disqualify you from government benefits for your health care in retirement. However, certain estate planning tools let you "spend down" in order to qualify.
When you work with an estate planning attorney, you can set up a trust to transfer your assets into. This means that the trust will be the legal owner of your home, stock investments, family business, or other valuable assets instead of you. When you apply for Medicaid coverage to help offset the costs of your long-term care, you can meet the income threshold and thus qualify for government assistance.
Advantages of Medicaid Planning
It's not uncommon for married couples to have different health care needs. One spouse may require full-time, in-home care for a serious illness, while the other is healthy enough to live independently. Working with a Medicaid planning attorney can help ensure that the ailing spouse has all their health care needs met, without having to pay out of pocket and reducing the resources available to the healthy spouse.
It's important to note that while Medicaid planning can be very useful in helping senior citizens avoid spending all their earnings on medical care, each state has its own rules for how Medicaid is administered and what types of income or assets disqualify a person from claiming benefits. This it's why it's important to work with an attorney when making plans to "spend down" income.
Working with an experienced professional can help seniors live comfortably in retirement and ensure that they don't face financial hardship due to their health care needs. If you have questions about Medicaid Planning, or what type of estate planning tools would allow you to qualify for Medicaid benefits, reach out to an attorney to learn more.