For older Americans, receiving needed medical care in old age will mean ensuring an easy transition into Medicaid. The problem they will face, however, is the strict financial rules governing eligibility to receive Medicaid benefits. Consequently, it is often all-too-easy to run afoul of them.
One particularly common asset that can trigger trouble is an Individual Retirement Account, otherwise known as an IRA.
Here is an important question to ask: “Can an IRA Affect Medicaid Eligibility?”
ElderLawAnswers posed and answered this question, noting that the greatest asset many of us will own throughout our lives and well into old age will be our IRA or other retirement account. That said, just because you have the account does not necessarily mean it will be enought to pay for your needed medical care. No, in the end you might need Medicaid.
So, again, can an IRA affect Medicaid eligibility in Overland Park and elsewhere?
The short answer is that “it depends.” It depends upon whether or not the IRA is in “payout status” (i.e., are taking minimum required distributions?). This might actually work differently than you would expect. If your IRA is in payout status, then you might be in the clear.
Medicaid allows you to have some income for personal use, after all. As a result, the payout from an IRA might be small enough to remain below the Medicaid income threshold. Larger amounts will simply go to the nursing home until reduced to the small personal expense amount authorized by Medicaid.
If your IRA is not in payout status, however, then the IRA is non-exempt and can be held against you, potentially to full value.
Through proper planning now, you may be better positioned to avoid Medicaid qualification problems later. To be sure, IRAs can be tricky. Much of what you should do will depend upon your specific circumstances, with more than a little hanging on state law.
Since interpreting the relevant laws can mean a world of difference, seek competent Elder Law counsel in structuring a plan.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: ElderLawAnswers (March 24, 2014) “Can an IRA Affect Medicaid Eligibility?”