The answer to your question turns on the facts of your unique circumstances.
For starters, no one should "want" to be on Medicaid, otherwise known as "Public Assistance."
After all the "government" (i.e., taxpayers) is bleeding red ink at seemingly every level.
As a shared federal-state program, Medicaid already devours a large portion of their budgets.
And those numbers are not trending downward.
That noted, Medicaid should be available to our fellow citizens who need health care and/or nursing home care due to life circumstances beyond their control.
For example, someone who truly has legitimate mental or physical challenges.
As the famous golfer Bobby Jones responded to questions when a debilitating illness cut his career short: we "play the ball where it lies."
Now, back to the question at hand.
Fortunately, a recent Kiplinger article took up this topic and reviewed five different Medicaid scenarios.
The article is titled "What You Need to Know About Applying for Medicaid."
For starters, Kiplinger reminds us that Medicaid is a "means-tested" program. Consequently, your income and assets must be at a very low level to qualify for Medicaid.
Moreover, Medicaid is not a "right" or even an "entitlement."
Let that sink in a moment.
Regardless whether your tax dollars have helped pay for Medicaid (along with the shrinking pool of your fellow "taxpayers"), it is not intended to be the go-to plan of first order for otherwise able-bodied and responsible Americans.
If you are eligible, however, then Medicaid may provide assistance for ongoing living needs and services provided by approved home care providers or, in advanced cases, at a nursing facility.
Medicaid eligibility requires an individual to relinquish either income and assets or control over their income and assets present and future.
But many Americans are in their sixties or seventies, in good health, and with plenty of assets.
Consequently, these folks are not ready to part with their income and assets—or control over them—as many still have healthy, active years ahead of them.
So, what to do?
In many instances, the first encounter a family has with Medicaid eligibility comes dressed as a "crisis" when adult children suddenly experience caring for the health needs of their senior parents (think strokes, dementia, Parkinson's disease, or Alzheimer's).
Thereafter, many Baby Boomers do not want their own children to experience emotional turmoil and financial commitments they have recently experienced.
Against this backdrop, instead of rushing into any decisions (reacting is never preferable to planning in advance), here are some scenarios to think about when it comes to "Medicaid planning" based on your present and (potential) future circumstances:
Younger than Age 70 and Healthy.
According to Kiplinger, do not commit yourself to transferring assets for at least another decade.
It recommends that you place your real estate and certain businesses in Medicaid-compliant trusts and use non-retirement assets for discretionary expenses.
Younger than Age 70 and Not Healthy.
While there may be some time to plan, due to five-year "look back" constraints for asset transfers, a comprehensive understanding of Medicaid is critical at this point.
High Income, But Low Assets.
Large amounts of either assets or income can make a person ineligible for Medicaid.
Although assets can be transferred to another family member, income is harder to transfer.
To make matters even more difficult, even the amount of retirement income your receive is not easy to control.
The article counsels younger pensioners with large monthly incomes to consult an Elder Law attorney about ways to convert large incomes to assets then capable of being transferred to other individuals.
Disabled Minor Children.
Medicaid planning for a disabled minor child should start prior to the child attaining the age of 18.
Period.
Courts grant guardianships more easily over people who have never had mental competency than those who have had it and lost it.
Furthermore, courts will look at the future guardian's ability to apply for Medicaid.
Benefits may be easier to obtain in these situations.
Final thought: Do not forget to create a supplemental needs trust for your minor child with special needs! Also, make sure that trust has appropriate "funding" for the future needs of your child (e.g., life insurance).
No Spouse and No Children.
You may think about not pursuing Medicaid planning unless you feel you need to preserve your extended family's wealth.
Medicaid may pay additional health care costs that Medicare does not.
On the flipside, the personal care Medicaid does provide may be less than what out-of-pocket care providers can offer.
Logically, you should wisely use your own assets for your benefit and save Medicaid for when those assets are depleted.
Learning about Medicaid can be done any time, but once steps have been taken to apply for Medicaid, you might not be able to undo your efforts.
And a mistake in the application process can be devastating.
Do not be in a hurry to give up your financial freedom.
If Medicaid is an option you do want to consider, then consult with a bonafide Elder Law attorney ... not an attorney who only focuses on Estate Planning like yours truly.
I do not provide any elder law advice and counsel, but recommend folks contact an elder law attorney who is a member of the National Academy of Elder Law Attorneys.
So, Kyle what is your "personal" philosophy and approach when it comes to your own long-term care planning?
Answer: To make financial arrangements now so I can pay my way later.
If you are similarly disposed, then one solution to consider is long-term care insurance.
Since you and I have about a 50% chance of needing long-term care once we reach age 65, it would seem to be a no-brainer.
Sure, we all have to make financial choices with our budgets, but this is the "personal responsibility" play.
As regular readers know, Gretchen and I purchased our own policies seven years ago.
Not only do I strongly recommend this option, but I have taken my own advice.
Yes, I do eat my own cooking.
Don't you want to pay your own way, too?
That way we can preserve the solvency of Medicaid as the societal "safety net" it is intended to be.
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.
Reference: Kiplinger (April 15, 2016) "What You Need to Know About Applying for Medicaid"
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