Medicaid planning is the process in which people take steps and develop tools that will allow them to use Medicaid to pay for their long-term care expenses. The cost of long-term care has been exploding in recent years, and a single year in a nursing home or assisted living facility can cost an average of $70,000 or more. In fact, in some situations, $150,000 per year in long-term care expenses is not uncommon. This poses a significant problem for those who want to keep as much of their assets as possible. If you’re forced to pay hundreds of thousands of dollars in long-term care expenses, there’s a very good chance you might not have much left over to pass on to your family and loved ones. This is where Medicaid planning comes in. To help better explain what Medicaid planning is and how it works, let’s take a look at some essential questions.
What is Medicaid?
Medicaid is a health care insurance system that pays for the health care needs of people with disabilities, children from low-income families, as well as seniors and those who require care in a long-term care facility, such as a nursing home. As a jointly run state and federal health care insurance system, Medicaid has significant limitations on who can use it, most of which surround the question of assets. In other words, if you own too much, you cannot take advantage of Medicaid.
What is Medicaid Planning?
Medicaid planning is a process in which a person structures his or her assets so that, when the time comes, that person can apply for and receive Medicaid benefits. More specifically, a Medicaid plan is designed to allow you to use Medicaid to pay for any expenses associated with long-term care costs so you don’t have to use your own money or property to pay for them.
In order to craft a Medicaid plan you have to be able to create a plan that uses one or more different legal tools that will allow you to qualify for the program. These tools can be very complicated, which is why you should always construct a Medicaid plan with the aid and guidance of your attorney.
Further, Medicaid not only has asset limitations, but also has significant time restraints. Put simply, if you need to pay for long-term care costs but have not yet developed a Medicaid plan, you will likely not be able to use the Medicaid program to pay for the costs until significant time has passed. This time can cost your family a significant amount of money.
A properly crafted Medicaid plan is one that you create well in advance of requiring long-term care, which is why beginning the planning process as soon as possible is so important.