Protect Your Assets To Make The Most Of Long-Term Care Coverage
People who apply for Medicaid are required to have no excess assets. When your finances are reviewed for eligibility, any money available to pay for your care expenses makes you ineligible. By hiring an experienced Pittsburgh elder and disability law attorney, you will have an ally who understands complex Pennsylvania asset protection laws. Marks Elder Law has provided trusted elder law, probate, and estate planning guidance for more than 40 years, and we have the insights and knowledge our clients need to preserve their hard-earned savings.
What Are Medicaid’s Asset Rules?
Medicaid is a program designed for those who are unable to afford long-term care. If your application shows that you have the means under the rules to afford your own care, Medicaid requires you to spend almost all your own money on your own care first before Medicaid will pay anything for you after your money runs out.
There are several options available to protect your assets in your Medicaid application. An experienced elder lawyer will know strategies to best protect your assets in consideration with Medicaid.
Common Medicaid asset protection strategies include:
- Asset protection trusts
- Income trusts
- Caregiver agreement
- Private annuities and promissory notes
- Spousal transfers and spousal refusal
What Is A Trust Generally?
By putting assets in an asset protection trust, you can avoid having them counted against your Medicaid application.
A trust is a legal agreement with certain features such as:
- Someone creates the trust agreement
- Someone is in charge as the Trustee – sometimes the same person as the trust creator, sometimes different
- Trust funds and property are to benefit only the trust beneficiaries
- Trust funds are owned by the trustee rather than by an individual
- Designated instructions say how and when Trust funds may be used
- Beneficiaries are only able to access, receive or use trust money according to the trust agreement
- IRAs cannot go into a trust without first being liquidated (can cause tax liability)
When To Set Up An Irrevocable Asset Protection Trust?
- Because some time must go by before an irrevocable asset protection trust will be effective, timing is critical, and it’s important to implement this strategy as soon as possible.
What Must The Asset Protection Trust Say?
In order for a trust to be helpful for approval by Medicaid, it must be irrevocable, meaning you as the trust creator cannot just decide to take it back. Also, the trust creator must give up direct access to the trust principal. By reducing your individual net worth using an asset protection trust, you can qualify for Medicaid long-term care coverage later. We advise applicants to speak with a Monroeville elder law and estate planning lawyer before making any decisions.
VA Benefits Compared To Medicaid
In general, VA benefits work better for those who need less extensive care. VA benefits can help close a gap between income and care costs and slow the rate of spending down your savings. If you need long-term nursing home care, you probably need more coverage – such as is offered by Medicaid instead. VA benefits and Medicaid are governed by different rules. Medicaid’s so-called “five-year look-back period” means that Medicaid will look backward five years into your finances and penalize you for any gifts (or transfer into trusts) made during that period, while VA benefits rules do not penalize past gifts (at least, not at the present time). The sooner you establish a Medicaid-appropriate trust and begin the process, the better, while a trust for VA purposes can be created just before applying.
Changing Strategies As Needed
The care you need now may not be the care you need next year, or during the next five years. Marks Elder Law understands how to help clients make changes to their asset protection strategies no matter where they are in their planning process or their need for long-term care. No matter what your situation is, you have nothing to lose and everything to gain by calling our Pittsburgh elder law firm and discussing your options.