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How to add Medicaid planning to your estate plan

On Behalf of | Oct 25, 2023 | Estate Planning

Medicaid planning goes hand-in-hand with estate planning. Tackling these matters together can help ensure that you meet your healthcare needs while preserving your assets for your loved ones.

It is important to understand how Medicaid planning works and what exactly you can do to integrate it with your estate plan.

Understanding Medicaid

Medicaid is a government program that provides healthcare coverage to individuals with limited financial resources. It can be life-changing for seniors who may need long-term care such as nursing home services. However, to qualify for Medicaid, you must meet specific income and asset requirements. Failing to plan for Medicaid can result in significant out-of-pocket expenses for long-term care.

Start early

The key to successful Medicaid planning is to start early. The Medicaid eligibility process involves a look-back period, during which the government examines your financial transactions. Any large gifts or transfers of assets made within this period can affect your eligibility. By starting the planning process well in advance, you can strategically manage your assets and avoid potential issues.

Asset protection strategies

There are several strategies you can employ to protect your assets and qualify for Medicaid. These strategies include:

  • Irrevocable trusts
  • Annuities
  • Spousal protections

Using these strategies wisely can ensure that you meet your ongoing financial needs without harming your Medicaid eligibility in the future.

Review your plan regularly

Estate planning, including Medicaid planning, should be an ongoing process. Life changes, and so do your financial circumstances. Regular reviews of your estate plan can help you adjust to new developments and stay in compliance with Medicaid rules.

Medicaid reportedly provides support to more than 90 million people in the United States, but it has certain eligibility requirements. Ensuring that your other late-life financial planning does not affect your Medicaid compliance requires handling Medicaid and estate planning in tandem.