Medicaid Asset Protection
What You Should Know About Protecting Your Assets For Medicaid
July 2, 2004
By Monish Datta
Medicaid Asset Protection 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.
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. 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 a joint federal-state program which covers health services
for low-income individuals and families. Coverage and eligibility
requirements vary from state to state. Medicaid is the primary payer
of nursing home care. In addition, many states offer some level
of home and community-based long-term care services for eligible
individuals. Such additional services are at the option of the state
and are not mandated by Federal law.
Protection 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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