What is Medicaid Planning?
The Expense of Long Term Care Costs
According to the State of New Jersey Department of Banking and Insurance, a national study has shown that “of the approximately 2.2 million persons reaching the age of 65 each year, more than 900,000 are expected to enter a nursing home at least once before they die.” With this understanding, many of us will require some form of assistance with our daily living requirements, including the placement in a nursing facility.
Many people have the false notion that Medicare will cover this kind of care, but Medicare’s coverage of nursing home care is minimal. In short, you can’t rely on Medicare to pay for long-term care.
Medicaid Planning in New Jersey and New York
How Medicaid Planning Can Help
For aging adults looking at options to live out a quality life, Medicaid is the primary public program that can help pay for long-term care. Medicaid will pay some or all of the associated costs for nursing home care, assisted living, home care, or other long-term support for eligible individuals. But Medicaid assistance is only available to those who meet their financial needs guidelines.
Qualifying for Medicaid When You Don't Initially Qualify
Medicaid Spend Down and Look Back Constraints
You may also be able to transfer or sell assets, providing you do so 5 years before you apply for Medicaid. Although it may be tempting to give away assets to family or friends as “gifts” to reduce countable assets, Medicaid imposes penalties for assets that have been hastily given away or sold for less than their market value in order to qualify for benefits. Consequently, they have implemented what is called the “look-back period.” In New Jersey, this is a 5-year waiting period between asset transfers and application for benefits. Another option for Medicaid qualification is creating a Medicaid Asset Protection Trust. This is a legal device that allows individuals the ability to meet Medicaid qualification standards while still protecting their assets. Because of the complexity of Medicaid, getting the assistance of an experienced New Jersey Medicaid lawyer is critical to make sure you are staying strictly within Medicaid’s qualification criteria.
Why Pre-Plan for Medicaid?
Considering the financial alternatives, proactive Medicaid planning is crucial for a comprehensive long-term care plan. Because of Medicaid’s stringent eligibility guidelines and timelines, it’s essential to consider these strategies well in advance of need. This makes planning for Medicaid with the assistance of a Medicaid attorney all the more critical.
What is a Medicaid Asset Protection Trust, and Why Should You Create One When Planning for Medicaid?
How Medicaid Planning Works With a MAPT
There are specific rules that must be followed by the trust regarding how the money can be used and who may be named beneficiaries. To comply with Medicaid, the trust maker cannot be the trustee or principal beneficiary of the trust. This ensures that the funds are not accessible to the trust maker to pay for their care but must be properly managed by the trustee.
Additionally, a MAPT must be irrevocable for its assets to be exempt from Medicaid’s assets limits. An irrevocable trust cannot be changed or cancelled, ensuring that the trust maker will not be able to regain ownership of them.
The Beauty of a Medicaid Asset Planning Trust
With a Medicaid Asset Planning Trust, the trustmaker can meet Medicaid’s eligibility requirements while maintaining some control of their assets. Assets are also protected for the beneficiaries of the trust. In some cases, Medicaid tries to collect the remaining assets left in a trust to reimburse them for money that has benefitted the individual. In the case of a Medicaid Asset Planning Trust, these assets are safe from any Medicaid payback requirements.
There are many benefits of planning for Medicaid long-term care benefits with a Medicaid Asset Planning Trust. If you or a family member is looking for advice concerning estate planning and long-term care, it is important to get the skilled legal advice of a Medicaid lawyer to understand the options available. Contact Us at AJC Law Office to schedule an appointment to discuss how Medicaid planning may be a practical solution for you.