Throughout your life, you may have always had access to medical care when the need arose. As a child, your parents and their insurance coverage likely covered any expenses associated with your care, and you may not have considered how costly health care could be until you faced your own medical bills as an adult. Though you may have obtained your own insurance, which helps in many instances, you could still have to contend with considerable out-of-pocket expenses.
In particular, if you find yourself needing long-term care in your retirement years, you could face substantial costs that your insurance may not cover. However, before you reach that point in your life — and many people over the age of 65 do — you may wish to consider planning ahead in hopes of avoiding a financial burden placed on yourself or your family.
Can Medicaid help?
Medicaid is a governmental benefits program that offers financial assistance for medical expenses to qualifying individuals. However, income-based eligibility requirements could potentially prevent you from qualifying if your income and assets exceed the monthly threshold. For 2017, the monthly income cap was $2,205. If your income exceeded that limit even by a few cents, you could not qualify for assistance.
How can you qualify?
Even if your initial income and accessible funds go over the allotted threshold, you may have the ability to plan and organize your funds in a manner that allows your income to fall under the eligibility amount. In some cases, a trust may prove helpful to individuals looking to qualify for Medicaid. With a trust, you can place some of your assets into the account and effectively remove them from your estate. However, you must use an irrevocable trust, which means that you cannot change or revoke the terms.
What’s the catch?
As you may have suspected, certain issues could arise with this planning option. For instance, Medicaid agents do a five-year look-back for New York applicants. This action involves reviewing your financial situation for the last five years to determine whether your income level has consistently remained under the eligibility threshold. If it has not, you will likely not qualify for assistance. Additionally, if you have moved certain assets into a trust during that time, you could potentially qualify but a penalty period may apply.
In order to better ensure that using a trust as part of your Medicaid planning could prove useful, you may want to plan well in advance. The timing of trust creation, asset transfers and Medicaid applications could all affect your eligibility, and therefore, you may wish to seek professional legal assistance with your plans.