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Medicaid planning: Understand the basics

As people live longer, it's becoming increasingly common for families to struggle with Medicaid's rules regarding assets when a spouse or parent has to go into a nursing home.

In order to preserve the family's assets for the other spouse or the parent's heirs, a lot of people turn to attorneys with experience in elder law and Medicaid planning.

Why do people seek help with Medicaid planning?

The rules for long-term care under Medicaid only allow the community spouse who is not in the nursing home to keep a limited amount of assets (usually including the family home). If there is no community spouse, however, even the family home can be lost to estate recovery. In some cases, that may be a legacy that was planned for decades for the senior's heirs.

Is there a way to avoid the problem?

If you are fortunate enough to be able to qualify for and afford long-term care insurance before you develop any serious or chronic health problems, that's an option. However, many people can't afford it while they are younger and at their healthiest, and the option for that type of insurance can vanish as soon as someone hits middle-age or develops a chronic condition like diabetes.

For others, irrevocable trusts are often the best way to guard the family's assets and preserve them for the other spouse or the parent's heirs.

When should you seek advice on Medicaid planning?

It doesn't help to panic. The time to seek advice on Medicaid planning is when it first becomes clear that either a spouse or parent is likely to go into a nursing home and not return to independent living. Prior to that point, you have no reason to take action.

If you're hesitant about the idea of using Medicaid planning, don't be. The laws are put into place precisely for this kind of situation. The parent that isn't going into the nursing home may live for decades and have need of those assets. Heirs may have medical and financial needs that those assets can help cover.

If your family is facing the outrageous cost of a nursing home for a spouse or parent, don't hesitate to look for sound advice.

Source: BusinessPeople, "Medicaid Planning Basics," Leah C. Good, accessed Jan. 17, 2018

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