Medicaid can take your assets through a process called estate recovery, generally occurring after the death of a recipient who was 55 or older or permanently institutionalized. It seeks to recover costs for long-term care, nursing home care, and related services, often targeting the home and other assets.
Specifcally, federal Medicaid law requires recovery against the recipient's assets if the recipient was at least 55 years old when receiving services.
Irrevocable Trust. The person you care for can transfer assets into an irrevocable trust to protect them from Medicaid spend-down or penalties, as long as they set up the trust more than five years prior to applying for Medicaid.
See state-specific Medicaid asset limits. Married couples with both spouses applying for Nursing Home Medicaid or a HCBS Waiver are typically allowed $3,000 or $4,000 in countable assets. In many states, married applicants are considered as single applicants and each spouse is permitted up to $2,000 in assets.
Special needs trusts help you to manage inheritance money so it won't count toward income-based benefits like Medicaid and Supplemental Security Income (SSI). The money in special needs trusts must pay for expenses your government benefits don't cover.
Understanding Medicaid Liens and Reimbursement
If you become injured as a Medicaid recipient and seek medical care using Medicaid to pay, you may have to repay the cost of care out of your settlement. States may impose Medicaid liens on settlements.
Starting January 1, 2024, the asset test to qualify for a Medicare Savings Program was eliminated. This means individuals can have any amount of assets and still qualify for a Medicare Savings Program.
Establish an Irrevocable Trust
Cash, property, and investments can be transferred into an irrevocable trust. By doing so, these assets would be removed from Medicaid's calculation. However, this trust would need to be established at least five years before applying for Medicaid to avoid lookback scrutiny.
To be eligible for Medicaid Long Term Care, seniors have to meet medical requirements and two financial requirements – an asset limit and an income limit. Not all assets count toward the asset limit, but money in bank accounts will count.
If you've been injured due to someone else's negligence and received financial assistance for medical treatment through Medicaid, there's something you should know. The State Department has the right to be reimbursed for those expenses—which means they are entitled to a portion of your personal injury settlement.
Debt collectors can still pursue outstanding balances even if an individual is enrolled in Medicaid. However, the practical ability of collectors to recover debt from Medicaid recipients is limited due to various legal protections, including garnishment limitations on government benefits like Social Security payments.
This means the individual is not eligible for Medicaid until the “excess” assets (the assets over Medicaid's asset limit) are “spent down”. California is the only state without an asset limit (eff. 1/1/24). Medi-Cal beneficiaries can have unlimited assets and still be eligible for benefits.
Want to make your assets virtually untouchable by creditors and lawsuits? Equity stripping may be the answer. This advanced technique involves encumbering your assets with liens or mortgages held by friendly creditors, such as an LLC or trust you control.
Disowning assets is not about abandoning wealth recklessly; it's a legal strategy to restructure ownership so that an individual may qualify for Medicaid coverage. This can involve moving assets out of one's direct ownership or converting them into exempt categories recognized by Medicaid.
State Medicaid agencies operate electronic asset verification systems (AVSs) that collect information directly from financial institutions to determine whether certain seniors and people with disabilities who are applying for or receiving Medicaid have assets below eligibility caps.
In most states, the Look-Back Period is five years long. This means the state officials who are reviewing your Medicaid application will “look back” into your financial history for the five years before you applied to make sure you haven't given away any money or assets, or sold them at less than fair market value.
This rule stipulates that any asset transfers made within five years before applying for Medicaid will be closely scrutinized. The primary objective of this provision is to prevent individuals from giving away or selling assets for less than their worth just to qualify for Medicaid assistance.