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Medicaid planning is a delicate balance of now and then

If your parent spent the last years of his or her life in a nursing home, you probably understand the financial toll. In fact, your loved one may have put off seeking long-term care because of the astronomical cost, but in the end, it was unavoidable. Your parent may have had to sell your childhood home and use up all his or her assets to qualify for Medicaid, leaving you and your siblings with no inheritance and perhaps lingering medical and funeral expenses.

You have spent years earning a living to raise your family in comfort with the hope that you will leave them with some sort of security. The last thing you want is to burden them with the worry and cost of your long-term care, but you know that in a matter of weeks, the cost of a nursing home could wipe out everything you own. The question is how do you plan your estate to provide for long-term care?

Preparations for the long run

It's a crapshoot, but the odds are against you. Chances are pretty good that, as you grown older, you will need long-term care in some capacity. If your employer offers long-term care insurance, you may consider purchasing this. However, most people end up relying on Medicaid.

To qualify for Medicaid, you must have a limited income and few assets. In New York, you are ineligible for Medicaid if your income is greater than $825 a month. However, many people may have an income that is more than $825, but it's still not enough to afford long-term care. If you are in this situation, you may consider the option of a Pooled Income Trust. Here are some of the benefits of this type of trust:

  • Since the income limit for Medicaid is $825, you would transfer any amount you earn above that to the trust, which is generally operated by a nonprofit organization.
  • The assets in the trust do not count against your eligibility for Medicaid as they do in other trusts.
  • You can use the trust to pay premiums for Medicare Part B or MediGap insurance and your $825 for living expenses.
  • After your death, funds remaining in the trust benefit the nonprofit organization that operates the trust.

A Pooled Income Trust is only one of the options that may be available to you as you consider the possibility of needing Medicaid for long-term care in your future. Meeting with a professional skilled in elder law may provide you with the options that are most advantageous to your circumstances.

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