Planning for Medical Assistance
Statistics show approximately 62% of nursing home care is paid for by Medical Assistance, and 48% of those turning 65 will need long-term care services in their lifetime. Even in times of good health, planning for the possibility of Medical Assistance is crucial to your estate planning.
To qualify for Medical Assistance, all of your assets valued over $3,000 are “taxed,” or subject to government reimbursement, at a rate of 100%. That is not a typo. You will lose all assets to qualify for Medical Assistance if you do not properly plan. There is also an income test for Medical Assistance that is similarly strict and is complicated by marital status and other statutory factors. Planning for Medical Assistance is tougher than court probate and estate taxation.
Know Your Numbers
Determining which of your assets are included in a Medical Assistance calculation is much more difficult than determining the need for court probate, and is even more difficult than calculating estate taxes. We want every client to know what assets may be protected in a Medical Assistance application, and what assets will absolutely be counted against a future application. Even assets exempt in the application process can later be taken to reimburse Medical Assistance payments.
Strategies
Strategies to prevent Medical Assistance recapture from your assets and income are potentially powerful, but also limited and fraught with potential issues if not done properly. Some of the strategies we implement, depending on our client’s situation, are:
- Irrevocable Trusts for the risk tolerant.
- Pooled Trusts for certain ages and needs.
- Medicaid Compliant Annuities to generate an income stream from liquidated funds and qualify for Medical Assistance.
- Prepayment of certain allowed expenses, if feasible and it makes financial sense (i.e. pay off mortgages, credit cards, or car payments).
- Purchase of assets exempt from Medical Assistance (burial space items, prepayment of memorial expenses, and newer or more advanced personal property items).
