Given enough time, many people will need long-term care. Medicaid is a crucial resource for many seniors facing high LTC costs, but qualifying for it involves navigating strict income and asset limits. Additionally, your assets may be at risk even after you pass away. This makes many wonder if they can use their estate plan to qualify for Medicaid.
Medicaid eligibility and asset limits
Medicaid is a federal-state program that assists low-income individuals with healthcare costs. To qualify for Medicaid in Maryland, an applicant’s income and “countable resources” must fall below specific thresholds. Given that the average cost of LTC in Maryland exceeded $125,000 annually in 2021, Medicaid is essential for many seniors.
Medicaid Estate Recovery Program
The Medicaid Estate Recovery Program enables states to recover costs from the estates of Medicaid beneficiaries after their death. If Medicaid pays for your LTC, Maryland can seek reimbursement from your estate.
What can MERP do?
For beneficiaries who received Medicaid after age 55, MERP can claim against their general estate assets to recover costs incurred. Maryland can place a lien on your home if you are in a nursing home, you qualify for Medicaid and a medical review determines you cannot return home. However, a lien cannot be placed if your home is occupied by a surviving spouse, a child under 21 or a blind or disabled child of any age.
Protecting your assets
To ensure your assets are protected while qualifying for Medicaid, consider Medicaid planning as part of your estate plan, but avoid large gifting. Transferring all your assets to qualify for Medicaid is not effective. Medicaid’s “look-back” period examines asset transfers made within 5 years of your application, which can result in penalties.
Irrevocable trusts
Establishing an irrevocable trust can safeguard your assets from Medicaid recovery. These trusts can protect your home and other significant assets, which makes them unavailable for Medicaid recovery.
Conclusion
Medicaid is vital for seniors needing LTC, but careful planning is required to navigate its complex rules. You can create a comprehensive estate plan that meets your needs, protects your assets and ensures Medicaid eligibility.