Every month, more and more Americans enroll in the Medicaid program to pay for their long-term care costs. While this program can help provide important access to healthcare, those considering signing up should be aware of a serious risk that comes with it – Medicaid Asset Recovery. With the right planning, however, you can eliminate the risk of Medicaid asset recovery causing an issue for your loved ones.
What is Medicaid Asset Recovery?
If a deceased Medicaid beneficiary received assistance when they were over the age of 55 and that assistance was used to pay for many long-term care programs such as nursing home costs or prescription drug payments, the program may seek reimbursement from their estate after they pass away. Without the right plan in place, Medicaid asset recovery can recover the costs of the care provided from any probate estate property, which is any property that is left to be managed by the executors of your will. This reimbursement often comes from the sale of the Medicaid beneficiary’s home, even though the home is exempt for the purpose of Medicaid qualification during the recipient’s lifetime. But, after death, this is often the only piece of property that can cover the huge costs of the care provided, so the home is usually the primary target of Medicaid asset recovery.
The Benefits of Planning for Medicaid
If the idea of assets being taken from your estate is alarming, don’t worry – you’re able to protect your assets by planning ahead. Irrevocable trusts, commonly referred to as “Medicaid Asset Protection Trusts” when used for this purpose, can be used to keep your assets safe from recovery. By placing your assets into a trust, they’re no longer considered a part of your probate estate; and because Medicaid asset recovery only applies to your probate assets, your home will be safe.
Most importantly, you’ll retain control of your home and all other assets just as you did before. They will be considered property of the trust, but your taxes and other important financial considerations remain the same. You are still able to sell your home, if necessary, and the trust will ensure that your assets will be passed on to any loved one you specify. Most importantly, however, this planning needs to take place at least 5 years ahead of the time you apply for Medicaid to be effective, so getting started soon is essential to successfully protect from asset recovery. If you’re ready to start planning for Medicaid, or just want an estate plan to help with your retirement and transfer of assets, contact Contact Highpoint Law today for your estate planning needs.
