You may make it through your working years without ever needing to turn to Medicaid for help covering your health car expenses; however, that could all change when you reach your retirement years. If you do find the need to qualify for Medicaid, and you failed to plan ahead, your heard-earned assets could be put at risk. To help you better understand why Medicaid planning is important, the New Jersey Medicaid planning attorneys at the Augulis Law Firm have created several frequently asked questions and answers relating to Medicaid planning. If you have specific questions about Medicaid planning feel free to contact our office to schedule a consultation.
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Medicaid is a healthcare program that is primarily funded by the federal government; however, the individual states have the option to supplement funding for Medicaid if they choose to do so. Although the federal government provides oversight for Medicaid, it is administered by the individual states which explains why you will notice differences in the eligibility criteria and benefits offered from state to state. In general, however, Medicaid serves low income individuals, families, the disabled, and the elderly.
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All applicants must meet based citizenship and residency requirements. In addition, Medicaid offers several eligibility categories, such as regular Medicaid, pregnancy Medicaid, and Medicaid for the disabled or aged. Because Medicaid is a “needs-based” program that is intended to help low-income individuals and families with healthcare expenses, the program uses both income and assets limits when determining eligibility. Those limits may vary among the categories. Nevertheless, an applicant cannot own countable resources (assets) valued at more than the limit or the application will be turned down. If you are applying for basic Medicaid as an individual senior in New Jersey, for example, your countable resources cannot exceed $2,000. For a married couple the limit is $3,000.
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Failing to anticipate, and plan for, the need to qualify for Medicaid can ultimately put your assets at risk. If you apply for benefits but your countable resources exceed the limit, your application will be denied and Medicaid will require you to “spend-down” your resources before applying again. In essence, this means you will need to rely on those assets to pay for your long-term care expenses until those assets are depleted. To avoid putting your assets at risk, incorporate Medicaid planning into your estate plan.
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Although it may be possible to benefit from last minute Medicaid planning tools and strategies, the key to getting the most out of Medicaid planning is to incorporate that planning into your estate plan early on. Medicaid uses a five-year “look-back” period when evaluating eligibility that prohibits assets transfers for less than fair market value during that time period. Consequently, a common Medicaid planning strategy is to make any necessary transfers outside of that look-back period. Creating a Medicaid trust, which is a specialized type of irrevocable living trust, to protect non-exempt assets is another popular strategy.
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One of the primary reasons that you might need to qualify for Medicaid for the first time as a senior is that Medicaid covers long-term care expenses – something Medicare does not do. Medicaid may also cover alternatives to long-term care such as an assistive living facility, community based care, and even in-home health services. Of course, for Medicaid to help with the costs associated with any type of senior care you must first meet the eligibility requirements.
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