A lot of people hear bits and pieces about nursing home expenses, and they wind up harboring misconceptions. In this post we will look at how a trust can protect your assets if you need long-term care, but there is a major player between you and the nursing home.
Medicare and Medicaid
To understand the dynamic, you need to know some things about Medicare and Medicaid. You are probably aware of the fact that Medicare is a government health insurance program that you pay into when you are working and paying your taxes.
Most people will qualify for Medicare when they reach the age of 65. Medicare coverage has nothing to do with financial need. If you pay into the program sufficiently, you qualify when you reach the age of eligibility.
Medicare will help with your medical expenses when you attain senior citizen status, but it does not pay for long-term care.
Things are different with Medicaid. It is also a government health insurance program, but eligibility is in fact based on financial need. You cannot qualify if you have countable assets that exceed $2000, but Medicaid will pay for long-term care.
How could you qualify for Medicaid if you have assets that exceed $2000 in value? First off, you should understand the fact that some things that you own do not count. Your home is not considered to be a countable asset, but there is an equity limit of $543,000 in 2014.
You can also maintain ownership of your wedding and engagement rings, your personal effects, your household goods, and one vehicle.
When it comes to countable assets, you could give assets to your loved ones before you apply. Another option would be to convey assets into a Medicaid trust.
This would be an irrevocable trust, so you cannot change your mind and take back the assets that you have conveyed into the trust. Ultimately, the beneficiary that you name would assume ownership of the assets in the trust.
When you convey assets into a Medicaid trust, you are surrendering ownership, so these resources would not be counted when Medicaid was determining your eligibility status.
In this manner, a Medicaid trust can protect your assets from a nursing home, because your loved ones would eventually assume ownership of the resources, and Medicaid would pay for your nursing home care.
Medicaid Planning Report
We have provided some very basic information in this blog post. If you would like to learn more about Medicaid planning, download our special report.
The report is free, and you can visit this page to obtain access to your copy: Grand Forks ND Medicaid Planning.
Elder Law Consultation
We offer free consultations to people who are concerned about long-term care costs. Send us a message through this page to set up an appointment: Grand Forks ND Elder Law Attorneys.