Medicaid Asset Protection Plan - What you need to know
How Proper Planning Can Save Thousands Of Dollars
October 26, 2004
By Monish Datta
Statistics show that about half of all
people reaching sixty-five will reside in a nursing
home at some time in their lives. The average cost
of a nursing home in the United States is approximately
$5000 per month, and in some cases may exceed $10,000
per month. The financial effects can be devastating.
Medicaid asset protection plan protects
your assets from nursing home or any other long term
medical care. Proper planning can ensure security
for your spouse and by protecting your hard earned
money, it can provide a legacy for your children.
Medicaid is the largest source of funding for long term care, it
was enacted for the benefit of those without resources and who had
no health insurance coverage. Many people, foreseeing future needs
for long term care often wish to qualify themselves for Medicaid,
knowing they will find it very hard to be able to pay for the high
costs of nursing homes for too long.
Asset protection for Medicaid involves designing a thorough plan.
A person may be advised to gift their assets to family members,
or to an irrevocable trust in order to reduce the amounts available
and make them eligible for Medicaid. For penalty purposes, there
is a 36 month look back for transfers to an individual and 60 month
look back for transfer to a trust. If the transfers have been carried
out during the look back period, it incurs a penalty, which is a
period of ineligibility for Medicaid.
Planning for Medicaid involves a number of tax considerations related
to income tax, gift tax etc. Whereas, a Medicaid plan may be designed
to achieve significant tax savings, Failure to comply with tax laws
may result is payment of extra taxes.
The key to Medicaid planning is to start early and act quickly.
The earlier a plan is implemented, the more the savings. It is recommend
you work with a qualified and experienced consultant or lawyer who
is capable of legally rearranging your assets to make you eligible
for Medicaid.
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