Your estate plan declares your intentions regarding your personal property when you die. It can also help protect your dependent family members after your death and provide them with guidance and necessary legal authority in a scenario involving your medical incapacitation.
Most people with an estate plan have at least a will, if not also powers of attorney and advance medical directives. Those with tax concerns or complicated family situations may also have trusts added to their estate plans.
Medicaid planning is something you need to address when thinking about your legacy, your retirement and your golden years. Why do most adults need to consider Medicaid when planning their estates?
1. Retirement savings won’t pay for nursing home care
With the possible exception of people who are independently wealthy, most older adults cannot cover the thousands of dollars per month that it costs to live in a nursing home with their own savings. Unfortunately, they also cannot rely on Medicare to cover those costs. The only way to ensure an older adult can readily pay for nursing home expenses is to plan ahead to quickly qualify for Medicaid.
2. Medicaid has very strict rules
Many people wrongfully think that they can quickly qualify for Medicaid when they run out of resources later in life. Unfortunately, these adults will learn the hard way that Medicaid has very strict rules regarding both assets and income.
Any property that you own other than your house might prevent you from qualifying for Medicaid. Any transfers you make in the years leading up to your application, including gifts to your family members, could result in the state imposing a penalty against you. You need to plan at least five years or 60 months before you think you need benefits if you want to avoid a large penalty at a time when you are financially vulnerable.
3. Medicaid wants your estate to pay it back
You may be able to qualify for Medicaid benefits despite owning a home, but the state could lay claim to your house after you die as a way of recovering the amount paid for your health care needs. The Medicaid estate recovery program can bring a claim against your estate and potentially use all of the assets that you intended to pass to your children or other beneficiaries.
Advance planning will make it easier for you to qualify for benefits when your health makes them necessary and will also protect your property after your death. Thinking about the possible need for Medicaid later in life will help you take the right steps during estate planning.