For seniors, the years after retirement can bring a variety of new health challenges that can force them to make difficult financial and health care choices. This is especially true when their health needs require them to receive the type of ongoing nursing care that they simply cannot find at home. At such times, seniors are often forced to consider care at a nursing home, and that means a whole new level of health care costs. With nursing home costs on the rise, Michigan elders can have few options other than to rely upon government programs like Medicaid – but many quickly discover that their income and assets leave them unable to qualify for those benefits. To avoid that potential nightmare, it’s important that you have a strategy in place to secure Medicaid eligibility in Michigan.
Why Medicaid Planning is Needed
These strategies are developed using Medicaid planning, and can be the most effective way to ensure that program benefits are there for you when you need them most. Without a solid plan in place, you could someday find yourself in need of nursing home care, but unable to properly finance your stay. For most seniors, the dilemma can take one of several different forms:
- You could find that you have enough assets to cover the cost of care for a few months, but that would mean basically impoverishing yourself before you could apply successfully for the benefits you need. That can leave you with no financial legacy to leave to your loved ones, might place undue hardship on your healthy spouse, and will force you to become dependent upon the state for all your needs.
- Alternatively, you could find that you can pay for most of your care on your own – but at the cost of depriving your loved ones of support that they might need. And again, you would be sacrificing the ability to leave behind a legacy, since your entire estate would be consumed by nursing care costs.
- Finally, you might find yourself unable to pay for any care. If you already have no assets and little income, Medicaid eligibility is all but a foregone conclusion.
You may think that you can simply give away assets to family members once you discover that you need nursing home care – or even sell those assets at rock-bottom prices just to get them into someone else’s name. There is, after all, nothing that technically prevents you from divesting yourself of those assets in this manner. Recognize, though, that any such transfers could have dire negative consequences when it comes to your ability to obtain eligibility for Medicaid benefits. Why? Well, it all comes down to Medicaid’s five-year look-back provisions.
Medicaid law empowers the government to look back through the last five years of financial transactions you completed just prior to submitting your benefit application. Those transfers of assets can be included by Medicaid as part of your estate for the purposes of determining your eligibility, since they can be viewed as attempts to shelter wealth from the program. When that happens, the program can penalize you for the value of those assets, blocking you from Medicaid eligibility for months or even years. That could leave you in a position in which you’ve gone to great lengths to reduce the size of your estate to the point where you cannot afford to pay for care, but now find that you have no benefits to cover nursing home expenses.
Far too many people discover these pitfalls the hard way, when they could have saved themselves the heartache and distress of Medicaid penalties by seeking help before attempting to protect assets on their own. It is always wise to seek counsel and assistance from a qualified estate and Medicaid planning attorney.
The problem is clear. You should do your best to avoid being placed in a position where you must make sudden, emergency decisions about your assets. That can be best accomplished through sensible asset protection and management strategies implemented many years in advance of any need for nursing home care. And that means using Medicaid planning to your advantage, and getting a head-start on that planning as soon as possible.
At its core, much of Medicaid planning is focused on structuring all the assets in your estate – along with your income – in a way that secures future Medicaid eligibility. At the same time, those assets need to be protected in a way that ensures that they remain available to your spouse and children, or other heirs and beneficiaries. Without that planning, you could end up facing financial ruin when you eventually need long-term care.
And make no mistake: Medicaid eligibility rarely happens on its own. While there are some people who end their lives with little income and almost no assets – just as there are those who have more than enough wealth to self-finance their care, most seniors end up falling in the cracks between those two extremes. Those seniors all need effective planning to protect whatever assets and income they have, using methods that don’t destroy their ability to secure critical benefits.
Medicaid planning utilizes many tools to accomplish your goals. These include the use of irrevocable income-only trusts, testamentary trusts for spouses, and annuities. For those who wait until the last minute, there are even emergency options that can be used to help preserve some assets. These can include asset conversion strategies, and a sole benefit trust. Ultimately, your unique circumstances and needs will determine which options are used by your estate planning attorney.
At Biddinger & Estelle, PC, our estate planning and elder law attorneys have the experience and expertise needed to help you with your Medicaid planning efforts. We’ll work with you to evaluate your current circumstances, review your needs, and create the most effective strategies available to ensure that you can meet the requirements for Medicaid eligibility in Michigan. You can’t afford to take any chances when it comes to your future nursing home financing needs. Contact us at our website or call us today at (989) 872-5601 to learn more about how we can help you with Medicaid eligibility and asset protection.
- When Does Someone Need Long-Term Care? - May 12, 2020
- Special Estate Planning Issues When You Have a Large Estate - December 16, 2017
- Five Questions to Help You Determine if Your Assets are at Risk - December 12, 2017