Three Ways to Protect Your Assets from Medi-Cal.
- 1. Use your assets to pay off your debts.
- 2. Buy assets that will not be counted by Medi-Cal.
- 3. Convert your countable assets to income.
Full Answer
How can I protect assets from Medicaid estate recovery?
In order to protect assets from Medicaid estate recovery, one option for those who have the time to plan is to utilize a "Family Asset Protection Trust" or even, quite simply, a " Medicaid Five Year Trust ."
Can a Medicaid asset protection trust be used to shelter assets?
Therefore, the assets are counted towards Medicaid’s asset limit. MAPTs cannot be used to shelter or reduce assets if the applicant is immediately applying for Medicaid. Planning well in advance of needing long-term care Medicaid is the best course of action when considering a Medicaid Asset Protection Trust.
Can I give my assets away to qualify for Medicaid?
If you try to give your assets and income away to try to qualify for Medicaid, Medicaid may disqualify you for benefits for a penalty period. There are several strategies that you can take to protect your assets and money, but they require advanced planning. Elder Care Direction may take the time to explain these different options to you. 1.
How can I protect my assets and money?
There are several strategies that you can take to protect your assets and money, but they require advanced planning. Elder Care Direction may take the time to explain these different options to you. 1. Asset protection trust
Does a revocable trust protect assets from Medi-Cal?
It is important to note that while assets in a revocable trust are protected from Medi-Cal Estate Recovery, a revocable trust will not help you become eligible for Medi-Cal if you have too many countable assets for the progarm.
How do I protect my home from Medi-Cal?
0:575:58How Do I Protect My Home from Medi-Cal Recovery? - YouTubeYouTubeStart of suggested clipEnd of suggested clipYour house into your chest to make sure that your trust is holding the bureau the title to the home.MoreYour house into your chest to make sure that your trust is holding the bureau the title to the home. And this means that medi-cal can't recover and reclaim the amounts that you receive a medical.
Does California allow asset protection trust?
As such, a discretionary trust is the most effective asset protection trust allowed under California law. Although California limits asset protection trusts to the benefit of third parties, California does allow for other asset protection strategies for that can protect a person's own assets.
How do I avoid Medi-Cal estate recovery?
How Do I Avoid the Estate Claim and Medi-Cal Recovery? The best and only way to avoid an estate claim is by leaving nothing in the estate.
Can Medicare Take your house California?
I. Can the State Take My Home If I Go on Medi-Cal? The State of California does not take away anyone's home per se. Your home can, however, be subject to an estate claim after your death.
Does Medi-Cal look at assets?
How to Qualify. To find out if you qualify for one of Medi-Cal's programs, look at your countable asset levels. You may have up to $130,000 in assets as an individual, up to $195,000 in assets as a couple, and an additional $65,000 for each family member.
How do I protect my assets in California?
The most effective way for a California to protect their assets is to keep them as far out of reach of creditors as possible. For this reason, many people prefer to seek an offshore asset protection trust. The offshore trusts provide the strongest available asset protection for the California resident.
Can I put my house in a trust to avoid creditors?
One of the reasons for setting up a trust is to set aside property as separate from one's personal assets. One of the benefits of this is that assets which are held in a trust are protected from creditors, for example should the settlor become insolvent or be declared bankrupt.
Are family protection trusts a good idea?
"A family protection trust will be particularly good for couples who want to make sure their partner can keep living in the family home, but on the basis that their estate will eventually be passed on to their children."
Do I have to pay back Medi-Cal after death?
The Medi-Cal program must seek repayment from the estates of certain deceased Medi-Cal members. Repayment only applies to benefits received by these members on or after their 55th birthday and who own assets at the time of death. If a deceased member owns nothing when they die, nothing will be owed.
What is the look back period for Medi-Cal in California?
30 monthsThe Medi-Cal "Look-Back" period in California is 30 months. "Transfer" means an outright gift or a "sale" made at less than "fair market value." If a disqualifying transfer of property is made, Medi-Cal will calculate the period of ineligibility for nursing facility level of care.
Will I lose Medi-Cal if I sell my house?
You can move out of the home, rent it, or sell it, all without affecting your spouse's Medi-Cal eligibility. However, there is an important timing issue here. For eligibility purposes, as an at-home spouse, you are only allowed to keep up to $137,400 in non-exempt assets (for 2022).
Why do people give away assets to Medi-Cal?
So, they give away many of their assets to relatives in order to reduce the value of their estate.
What is an exempt asset in Medi-Cal?
Exempt assets are those assets that are not considered by Medi-Cal for providing care, but may be subject to recovery after your death.
What are the two categories of assets in Medi-Cal?
How Medi-Cal categorizes your assets. In determining eligibility, Medi-Cal divides an individual’s assets into two categories: countable assets and exempt assets . Countable assets are those assets that are required for your care, prior to receiving Medi-Cal, and typically include the following: Exempt assets are those assets ...
What can you use your countable assets for?
In other words, you can use your countable assets to pay bills and expenses before you apply for Medi-Cal. For example, you can pay off existing loans, prepay real estate taxes or funeral expenses, and other large debts. A common example is paying off the mortgage on your home. 2. Buy assets that will not be counted by Medi-Cal.
How much income can a single person keep in a nursing home?
A single individual is living in a nursing home is allowed to retain $35 of income per month for personal use, with the rest of the income being applied to the cost of her medical care. For married couples, the countable assets are different, however.
How much can a well spouse keep?
The well spouse who still lives at home will be allowed to keep the home, one car, his or her own personal property, and approximately $100,000 (depending on the state’s current limits) in cash and investments. The well spouse may also receive a share of the couple’s monthly income. 1.
What is the minimum eligibility for Medi-Cal?
With the passing of the Affordable Care Act, the national minimum eligibility level for Medi-Cal is 133% of the federal poverty level. A common misconception that many people have is that they can make themselves eligible for Medi-Cal by, basically, giving away their assets. However, there are mechanisms in place that discourage individuals ...
How to Protect Your Assets from a Medicaid Lien
Given that California is unique in its implementation of the Medicaid program, this interview is related to planning in California only. However, Mr. Furman indicated that there are planning strategies available in other states that should be addressed with an elder law attorney in that state.
Living Trusts Changing in California
Furman indicated that in California, a new statute will become law in January 2017 for Medi-Cal recipients that died after December 31, 2016.
Questions Surrounding Medi-Cal
No. You can’t opt out of the Medicaid lien but you can plan around it by using certain strategies.
How long does Medicaid look back?
This is because Medicaid has a "look back" period of five years. Moving these assets into a protected trust long before you anticipate the need for Medicaid can go a long way toward providing protection for your family as you age while also keeping them safe for your use during your lifetime.
Can you recover from an estate with Medicaid?
Through the Medicaid estate recovery plan, states are allowed to impose liens on property during the recipient's lifetime and use money from the recipient's trust to cover expenses paid during the individual's life. States are not allowed to recover from an estate when there is a living spouse, a child under the age of 21, ...
Is Florida Medicaid a creditor?
Florida Medicaid is a creditor. Their process of attempting to collect is known as Medicaid estate recovery, and those who are planning for their future into advanced age should do so with an understanding of how Medicaid estate recovery works and what can be done to offer protection.
Medi-Cal and Long-Term Care
According to the U.S. Department of Health and Human Services, “at some point in our lives, about 60 percent of us will need assistance with things like getting dressed, driving to appointments, or making meals.” This type of assistance is often referred to as personal or long-term care.
Countable Assets and the Medi-Cal Spend Down
Although a person may not have health concerns now, planning for long-term care expenses is crucial. While Medi-Cal can help pay for long-term care and other medical costs, those with “countable resources” valued above a certain amount could end up being disqualified.
Protecting Your Assets from the Medi-Cal Spend Down
Although Medi-Cal imposes strict limitations on asset value, there are ways to protect your property and still qualify for coverage. For instance, you may be able to place some of your property into a Medi-Cal Asset Protection Trust.
Changes Ahead for Med-Cal and Medicare Recipients
Due to a change in the law, the Medi-Cal asset test as applied to adults receiving Medicare, the federal health insurance program for people 65 and older and people under 65 with certain disabilities, is going to be phased out beginning July 1, 2022.
What is asset protection trust?
An asset protection trust allows the assets to be distributed to the same people when you die so that your loved ones won’t have to pay capital gains tax on the amount that your assets have increased in value during your lifetime. Assets that are transferred to an asset protection trust do not belong to you.
What happens if you get rid of your assets during the look back period?
This can let you create a cash flow from your assets so that you can use it to pay for your nursing home care during a shorter penalty period.
What happens if your income exceeds the Medicaid limit?
Income trusts. When you apply for Medicaid, there is a strict limit on your income. If your income exceeds the limits, it must be handled properly so that you can obtain and keep your eligibility for Medicaid. You can fix this problem by establishing a qualified income or pooled income trust.
How long does it take for Medicaid to transfer to a trust?
However, transfers to trusts that occur within five years of when you need Medicaid will be subject to the look-back period. This makes it important for you to plan well in advance of when you think that you might need care. 2. Income trusts. When you apply for Medicaid, there is a strict limit on your income.
Can you get Medicaid if you give away your assets?
If you try to give your assets and income away to try to qualify for Medicaid, Medicaid may disqualify you for benefits for a penalty period. There are several strategies that you can take to protect your assets and money, but they require advanced planning. Elder Care Direction may take the time to explain these different options to you.
Can you ask for spousal support on medicaid?
When Medicaid begins providing the services, it will have the right to ask for contributions from the healthy spouse. Medicaid does not do this in some cases, and in others, it may be willing to settle for a lesser amount. Most states don’t allow spousal refusal.
Can you get medicaid if you have a low income?
If you are eligible for Medicaid, it will pay for your care. However, since it is a means-tested benefit, you will only be allowed to receive it if you have a limited amount of property or money, a low income, or both. Many older adults do not want to spend the money that they have saved on long-term care. If you try to give your assets and income ...
What is a Medicaid asset protection trust?
Medicaid Asset Protection Trusts (MAPT) can be a valuable planning strategy to meet Medicaid’s asset limit when an applicant has excess assets. Simply stated, these trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes. This type of trust enables someone who would otherwise be ineligible for Medicaid ...
What is look back on Medicaid?
During the look back period, Medicaid checks to ensure no assets were sold or given away for less than they are worth in order for one to meet the asset eligibility limit. For Medicaid purposes, the transfer of assets to a Medicaid asset protection trust is seen as a gift. Therefore, it violates the look back rule.
What are some alternatives to Medicaid?
Alternatives to a Medicaid Asset Protection Trust. In addition to Medicaid asset protection trusts, there are other planning strategies to help lower one’s countable assets. These may include funeral trusts and annuities. In addition, there are also strategies to help lower one’s income to become eligible for Medicaid.
What is an irrevocable trust?
Irrevocable funeral trusts, also known as burial trusts, are used to protect small amounts of assets specifically for funeral and burial costs. There are also qualifying income trusts (or qualified income trusts, abbreviated as QITs).
What is the maximum amount of Medicaid for elderly?
Generally speaking, the asset limit for eligibility purposes for an elderly individual applying for long-term care Medicaid is $2,000. However, this asset limit can be lower or higher depending on the state in which one resides. (For state specific asset limits, click here ).
Is gifting assets a legal requirement for Medicaid?
Gifting Assets vs. Creating a Medicaid Asset Protection Trust. While there is more flexibility with gifting assets and it does not require any legal work, it also violates Medicaid’s look back rule. As previously mentioned, this results in a period of Medicaid ineligibility as a penalty.
Does Medicaid count as assets?
Therefore, the assets are counted towards Medicaid’s asset limit.
What is SB833?
On June 27, 2016, Governor Brown signed SB833: legislation which reduces Medi-Cal Estate Recovery’s ability to seek reimbursement from the estate of a surviving spouse. In short, this means that you can now use a revocable living trust to protect your assets from being clawed back by Medi-Cal after you or your loved one passes away.
Can a revocable living trust be used to avoid probate?
While the formation of a revocable living trust, under the current law, was effective to avoid probate, it did not offer any protection against Medi-Cal’s ability to seek reimbursement from your assets for the amount of benefits Medi-Cal paid for the medical or long-term care costs they paid during your or your spouse’s life.
What are countable assets?
Countable Assets. Countable assets include: Bank accounts. Certificates of deposit. Life insurance policy with cash value over $2,500 (i.e., if the cash value is $3,000, only $500 is countable for Medicaid purposes) Property (additional real estate that is not for rent) Stocks and bonds.
Why is the look back period important for Medicaid?
The Medicaid Look-Back Period. For obvious reasons, many people want to preserve their assets for their spouse, children, or future generations. This is where Medicaid planning becomes very important.
How much income do you need to qualify for medicaid in 2021?
For the year 2021, you must have $2,000 or less in total countable assets and earn less than $2,382 per month in income. 3
How long does it take for Medicaid to look back?
Most states with the exception of California look back 60 months (five years); California only looks back 30 months. 4 . Any assets that fall under the Medicaid look-back period will delay when you can go to a nursing home. The more money that changed hands, the longer the waiting period.
Is an irrevocable trust good for Medicaid?
Benefits of an Irrevocable Trust. There are pros and cons to using an irrevocable trust as part of your Medicaid plan. For one, they can be a risky venture. As much as you believe the person you assign as a trustee will manage the assets in your best interests, there is nothing to stop that person from spending down the funds for their own gain.
Is Medicaid trust countable?
Medicaid will see this kind of trust as a countable asset. An irrevocable trust, on the other hand, is one where someone else, a designated trustee, takes the reins. You cannot touch the assets or amend provisions for the trust in any way. The trustee is not required to distribute any assets to you, even for the purposes of health care.
Is Medicaid planning complicated?
Medicaid planning can be very complicated, and is even more challenging by the fact that each state has its own rules. An irrevocable trust may be one option to consider.
What happens if a family member doesn't waste assets?
But even if your family member doesn’t intend to waste the asset you give them, it could happen. They could become seriously ill, incur a huge hospital bill, and have “their” asset seized to pay it. They could get divorced and “their” asset could be divided as marital property.
How long does it take to transfer Medicaid assets?
The transfer of assets into a Medicaid trust is subject to the five-year look-back rule, so it’s unwise to wait until the last minute to create a trust, although there are circumstances where a Medicaid trust can shield assets even within the five-year look back period.
What is a Medicaid trust?
A Medicaid trust is specially designed to contain assets in a way that makes them not countable for purposes of Medicaid eligibility; most trusts are not structured in such a way to protect assets from nursing home costs, so don’t assume that a trust you already have will do the job. Here’s how a Medicaid trust works: The trust must be irrevocable, ...
Can you transfer an asset to a family member?
If you transfer an asset, such as a house or financial account, to a family member, it becomes theirs to legally do with as they please, even if you have a verbal agreement that they will use the asset only for your benefit.
Can you give away assets to a nursing home?
In short, there are a number of ways that giving away your assets to avoid paying them to the nursing home can go wrong. Fortunately, you have other options if you are trying to protect assets from nursing home costs.
Is gifting assets to a nursing home a bad idea?
Unfortunately, if you are trying to protect assets from nursing home costs, there are several reasons why gifting assets to your loved ones to avoid paying them to the nursing home is a bad idea.
Does long term care insurance cover nursing home care?
Long-term care insurance may be available to cover or defray the expense of nursing home care. However, very few older adults—less than 10%—have long-term care insurance. The premiums can be expensive, and grow even more so the later you wait to obtain the insurance. Some people are in denial that they would need it, and are reluctant to pay high premiums for a benefit they may never receive. Others, unfortunately, wait too long and become ineligible.