Estate planning can involve many aspects, including creating a will or trust. However, people may not consider that it can also include Medicaid planning.
Medicaid is offered by the government and provides health care coverage. It is intended to be used by individuals and families, including people who are elderly, disabled or have long-term health care needs.
In New York, an individual must meet certain income and asset criteria to qualify for Medicaid. These are complex and specific to each person’s circumstances.
Medicaid planning involves protecting assets from being counted toward Medicaid eligibility requirements. This financial planning is intended to preserve the person’s assets and income while still qualifying for Medicaid coverage but should not include fraudulent or illegal activity such as hiding assets or falsifying records.
Some Medicaid planning strategies may include transferring assets, creating a trust, spending down assets and prepaying funeral expenses. Some transfers of assets made within five years of applying for Medicaid may be subject to a lookback period and penalties, but others may be exempt.
It may also be helpful to create a trust called a Medicaid Asset Protection Trust that is designed to hold assets and income, which may be used to pay for certain expenses.
An asset spend-down involves spending excess income on items that are not taken into consideration in eligibility calculations. Gifting some assets may also be an option, but that can carry risk.
Medicaid planning is complex and it is important that it is completed correctly.