Medicaid Planning: Protecting Assets While Qualifying for Long-Term Care

Paying for long-term care is one of the greatest financial challenges facing Virginia families today. A private room in a nursing home can run you more than $100,000 a year. Assisted living facilities or in-home care services can also be prohibitively expensive. For a lot of folks, Medicaid provides critical financial assistance. However, qualifying for Medicaid requires meeting strict income limits, which can put your family in a difficult position: How do you protect the assets you’ve worked a lifetime to build while still being eligible for Medicaid? In this article, the Virginia Beach estate planning lawyers will answer that question.

Why Medicaid planning matters

Unlike Medicare, which covers only short-term rehab, Medicaid pays for long-term nursing home care. The catch here is that eligibility rules can be complex, and the state will carefully review your financial situation before it approves benefits. Without the proper planning, a lot of families find out that they’re forced to “spend down” their assets before they can qualify. This jeopardizes retirement security, leaving little for your spouse or children. Medicaid planning offers strategies that address both of these concerns, protecting your assets while still meeting eligibility requirements.

The importance of timing

Among the most important aspects of Medicaid planning is timing. The State of Virginia enforces a five-year “look back” period. This means that the state examines all transfers of assets you’ve made within the past 60 months. If the state finds that you’ve given away assets or money during that time, it can delay your eligibility. This is why advance planning is the most effective approach. You should get the ball rolling several years before your care is needed.

Even families that are facing an immediate need for nursing home care still have options through Medicaid crisis planning. An experienced Virginia Beach elder law attorney can help restructure your assets quickly to minimize any potential penalties and preserve as much of your wealth as possible.

Common asset protection strategies

Every situation is unique; however, some commonly used strategies include:

• Medicaid-compliant trusts – Placing your assets into an irrevocable living trust can shield them from being counted for the purposes of Medicaid eligibility. Once your assets are in the trust, they are no longer considered a part of your estate. However, they can still benefit your loved ones.

• Spousal protections – Medicaid rules generally contain allowances that protect a portion of your income and assets for the healthy spouse who still lives at home (called the “community spouse”). Proper planning ensures these protections are maximized.

• Converting countable assets – Certain assets, such as your primary place of residence, a car, or prepaid funeral arrangements, are exempt from Medicaid calculations. If you convert your excess funds into exempt assets, it can help meet eligibility thresholds without losing value.
• Gifting with caution – While gifting money to children or grandchildren probably seems like an easy solution, improper transfers can trigger penalties. Carefully timing your gifting is important.

Talk to a Virginia Beach, VA Medicaid Planning Attorney Today

The Law Office of Angela N. Manz represents the interests of those planning for long-term care. Call our Virginia Beach estate planning lawyers today to schedule an appointment, and we can begin discussing your next steps right away.