Most people who have been fortunate enough to have private healthcare coverage during their working years know very little about the Medicaid program. If you suddenly need to qualify for Medicaid benefits, something that is more likely to happen than most people realize, you may find yourself asking “ Does the State take my assets when I go on Medicaid? ” Because there are many myths and misconceptions about Medicaid, it helps to have a basic understanding of why you might need to qualify for Medicaid and why Medicaid planning should be included in your overall estate plan as a result.
The majority of older adults will need assistance from the Medicaid program at some point before they die. The reason for this is that unlike most private health insurance policies and the Medicare program, Medicaid covers long-term care expenses. At the age of 65 you stand about a 50 percent chance of going on to need long-term care at some point in your life. By age 85, that figure jumps to a 75 percent chance. With an average yearly cost of close to $100,000, and an average length of stay of 2.5 years, most people cannot pay out of pocket for long-term care. Medicaid is often the only hope for assistance.
Medicaid, however, has very low income and asset limits that cannot be exceeded by recipients. This is one reason why people are concerned that Medicaid will take their assets. The other reason involves the Medicaid recovery program.
Medicaid does not actually take your assets when you apply for benefits; however, you may be required to deplete those assets, or “spend-down” your assets before Medicaid will start paying for care. Although the rules are complicated, the basic idea is that an applicant was utilize his or her available resources to cover costs before Medicaid will start chipping in to cover long-term care expenses. A lifetime of working hard and saving can disappear in a few short months as a result.
Medicaid recovery applies after a Medicaid recipient dies. If the Medicaid program paid for the cost of care, the Medicaid program will try and recoup those costs by filing a claim against the estate of the decedent. In a sense, this does allow Medicaid to take your assets, albeit after you are gone.
Both of these situations can be avoided by including Medicaid planning in your estate plan long before your retirement years. An experienced Illinois estate planning attorney can help you incorporate legal strategies into your estate plan that will protect your assets and ensure that you qualify for Medicaid benefits when you need them.
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