Your options for emergency Medicaid planning

On Behalf of | May 9, 2022 | Medicaid/Medicare

Far too many people do not realize that there is a significant chance that they may need some type of long-term care in the future. After all, about half of all individuals will end up in a nursing home or needing some other type of assisted living or long-term care services.

And this care can be so expensive that it ruins the person financially. Some facilities cost tens of thousands of dollars a year, and the most expensive can be upwards of $100,000 each year. Even those who have large estates can quickly see their assets eaten away by these costs, which threaten to leave their loved ones without the financial support that was initially intended.

Emergency Medicaid Planning

Although there are steps that you can take to reduce your assets and your income in a way that allows you to qualify for Medicaid, there is a 5-year lookback period, meaning that any transfers that you make within that period will lead to a penalty. This is significant because Medicaid would otherwise pay for your long-term care needs.

But what happens if you have neglected to plan for Medicaid in advance? Are you simply out of luck? Not necessarily.

Using a Miller Trust

A Miller trust is one option that you have at your disposal. Here, any income you receive in excess of Medicaid’s income limit goes into the trust. A portion of those trust assets are then used to pay for your care, but then Medicaid picks up the remaining balance. This is an effective way to reduce your income and cover a significant portion of your care expenses without losing the bulk of your estate to those costs.

Utilizing annuities

Another tactic that you may be able to utilize is purchasing an annuity. With this option, you transfer some of your wealth to a loved one and use the remainder of your wealth that is above the Medicaid asset limitations to purchase an annuity.

Although you will be penalized for the wealth transfer to your loved one, the annuity will issue monthly payments to you over time so that you can pay for your care during the penalty period while still protecting your ability to qualify for Medicaid later on. This option also allows you to keep your assets with your loved ones rather than spending down your assets on things like vehicles and home repairs.

Transfers to certain individuals

Federal law also allows for the transfer of assets to certain specified individuals without suffering a penalty. These include children who are disabled or blind and spouses. Keep in mind, though, that there may be restrictions on the transfer of these assets and how those assets can be used, which is why it’s best to discuss these matters with an attorney who understands the intricacies of Medicaid planning and the laws that intersect with it.

Take the action needed to protect your care and your assets

Suddenly facing the possibility of placement in a nursing home or long-term care facility can be frightening for many reasons. One of them is the fact that it can leave you and your family financially ruined if you are not careful.

That is why if you are trying to figure out how to pay for your care, you might want to reach out to a legal professional who is experienced in Medicaid planning as soon as possible. Hopefully, you will be able to find the security and relief that you need in order to shift your focus on taking care of yourself and your family.