Too many people seem to think that Medicaid is only for those who are exceptionally indigent, but that is not the case. Medicaid is a program intended to help those who cannot reasonably cover their own medical costs, including retired adults on a fixed income.
In order to qualify for Medicaid, you have to demonstrate that you meet certain standards, which can include living on an income below a certain level and meeting a limit to your total assets available for liquidation, such as investment accounts and cash on hand. Certain possessions, such as specific amounts of equity in your home, are exempt from consideration for Medicaid benefits.
However, your bank accounts, financial assets and current income could all influence whether you can receive Medicaid benefits when you need them. Given that the government will look back at five years of your financial records when trying to determine if you qualify for Medicaid, it is obvious that planning as soon as possible, rather than waiting for when you need benefits, is in your best interest.
What limits has the state set?
When it comes to liquid capital and financial assets, there is a shockingly strict limit in place for those who need Medicaid benefits. If you have more than $2,000 in countable assets, the state can require that you liquidate those assets prior to receiving Medicaid benefits.
Thankfully, your home equity is an asset not included in that calculation, at least up to a certain point. You can have up to $560,000 in home equity and still qualify for Medicaid. Your clothing, jewelry and other personal assets, as long as they are not held as investments, can often also be exempted from consideration. Your car is also exempt, but many other assets could leave you without the benefits you may need in the future.
Planning for Medicaid approval may involve gifts or a trust
There are many ways in which you can reduce the value of the assets the government will consider during the Medicaid application process. One of the simplest and most direct is to begin distributing some of your assets to loved ones and family members. Instead of leaving everything as an inheritance when you die, you can choose to strategically gift items and assets to your family members and heirs to reduce the total value of your possessions.
If you worry about how such distributions could impact your family or that they might result in the misuse of your assets, the creation and funding of a trust can be another means by which to insured Medicaid eligibility. You can place many assets in a trust, from financial accounts to the title for your home. So long as you do so at least five years before you apply for Medicaid, those assets should have protection from liquidation to pay for medical expenses.