The rising cost of long-term care is a stark reality we as a society need to face. The fact that the majority of us will need long-term care at some point in our lives means that it is something we literally cannot afford to ignore.
How are you planning to cover the cost of long-term care? The high cost means that it can quickly eat away at your life’s savings and most do not end up even thinking about long-term care insurance until they are no longer eligible to purchase it. This is why engaging in Medicaid planning can be so important. Medicaid provides critical benefits and even covers the cost of long-term care.
If you plan ahead, you will not have to see your assets spent down before you can qualify for Medicaid. Let’s take a look at what happens during the Medicaid planning process.
What Happens in Medicaid Planning?
Medicaid does provide coverage for long-term care, but there are strict low income and low asset requirements in order for a person to qualify for Medicaid. In the absence of planning, this will likely mean that your assets and savings will quickly be spent down and then Medicaid coverage will kick in when your finances have reached low enough levels.
With Medicaid planning, however, you do not have to see your assets spent away and can qualify for Medicaid as soon as you need the coverage. You see, Medicaid planning helps safeguard your assets to give you peace of mind and to give you the ability to pass them on to your loved ones.
The Importance of an Irrevocable Trust
There are several tools that can be put in place and other steps to take during the Medicaid planning process. One of the biggest things that may come about during the Medicaid planning process is the establishment of an irrevocable trust. While irrevocable trusts provide little flexibility to change once established, they provide critical asset protection and can help you qualify for Medicaid benefits at the same time.
When you transfer assets into an irrevocable trust, you are relinquishing control over those assets, but the trust can still be managed for your benefit and for the benefit of your loved ones. When properly structured, an irrevocable trust can remove assets from the Medicaid calculation, which will help you qualify for benefits.
What is Gifting in Medicaid Planning?
Gifting assets can also be an effective way to help plan for Medicaid coverage. If you are planning to leave certain assets to your loved ones eventually, anyway, making a lifetime gift of them can provide many benefits:
- You will get to see the joy the assets bring your loved one.
- Gifts can be tax exempt up to certain limits.
- Once gifted, the asset is removed from the Medicaid asset and income calculation which can help you qualify for Medicaid benefits.
Contact an Estate Planning Attorney
Medicaid planning is something too important to put off. Time is also of the essence as the Medicaid look-back rule means that transfers of assets within the five-year period prior to applying for benefits will be included in the Medicaid calculation. Do not delay. Contact Monk Law today.