Using Medicaid and Asset Protection to Help With Long-Term Care

Michigan Medicaid benefits are often necessary to help older adults cover their long-term care expenses. Medicare is available to most retired adults and their spouses, but coverage does not apply to long-term care costs. Michigan residents who require a bed in a nursing home, a lengthy stay in a rehabilitative facility or an in-home health aide may need Medicaid coverage for those expenses.

Medicaid’s eligibility restrictions make planning in advance crucial for the preservation of an older adult’s financial stability and the legacy they want to leave after they die. Applicants seeking Medicaid for long-term care benefits must have less than $2,000 in countable assets if they apply as individuals or under $3,000 in combined assets if they apply as a married couple.

Countable assets do not include up to $500,000 in equity in the Medicaid applicant’s home. Personal belongings, such as clothing and one vehicle, also do not count toward the total value of their resources for the purposes of Medicaid eligibility.

Those who have not planned ahead at the time of their application may need to engage in a spend down. This means using countable assets to pay for medical expenses until the pool of resources has a value below the applicable threshold. People frequently pay off existing medical debts and prepay funeral or burial expenses as part of the spend-down process.

However, those assets may later be vulnerable to estate recovery efforts by Medicaid. During probate proceedings, Medicaid can file claims seeking liquidation of previously exempt assets to repay the benefits received by an older adult who needed Medicaid for long-term care costs.

When assessing the finances of a Medicaid applicant, the state looks back at five years of transactions. It is therefore beneficial for people to plan for the possibility of long-term care at least five years before their health begins to decline. Strategies for reducing countable assets may include making gifts to loved ones, taking on co-owners for key resources and transferring property to an irrevocable trust at least five years before submitting a Medicaid application.

Taking steps in advance to enhance future Medicaid eligibility and limit estate recovery risks can be helpful for those on the cusp of retirement. Planning to protect assets and ensure access to long-term care coverage can give people peace of mind later in life. Medicaid planning is an aspect of elder law, and it is beneficial for anyone preparing for their golden years.

Otlewski & Maloney, P.C. in Rochester Hills assists older adults and across Michigan with Medicaid planning and other elder law needs. Schedule a consultation by contacting us online or calling 248-759-5641.