How Can Estate Planning Help You Qualify for Medicaid?

Medicaid planning is a part of estate planning and something you may wish to have help with in order to protect your assets and what you intend to leave behind to your loved ones. Medicaid has asset limits that make it difficult to become eligible if your estate is too valuable. With proper planning with your trusts, gifting and other tactics, you may be able to qualify while retaining many of the assets you wish to preserve.

In 2021, individuals 65 years of age or older must have an income of under $2,382 per month to qualify for Medicaid. Married couples may have double this. There is also an asset test. This includes your countable assets and allows you to have up to $2,000 in countable assets. Your home may be considered exempt in many cases, so long as your home’s value and equity don’t exceed $603,000 (this is higher in some states). If you’re married, there are major changes, but there are still limits in place.

Why Can a Trust Help with Medicaid Planning?

The reason that a trust can help with Medicaid planning is that a trust, such as an irrevocable trust, takes assets out of your name and estate. Since those assets don’t belong to the estate any longer, they usually cannot be counted toward the limits for Medicaid.

The notable exception is that there is a lookback period. In Minnesota, the lookback period is 60 months (five years) before the Medicaid application is made. If you give away major assets or gifts during that time, those may still be counted as countable assets until a five-year period has passed, which may negatively influence your application.

Estate Planning Can Help You Plan for Long-Term Care

Estate planning can include developing a plan for longer-term care needs, such as qualifying for Medicaid through the use of trusts or gifts prior to a lookback period. There are different options to consider, so it is worth going over them before deciding on which you’d like to use. Planning early may help you be ready for the application when the time comes, so you can protect your assets and still get the assistance that you need moving forward.