If you have relatively poor health and the necessity of nursing home care looms as a distinct possibility in your future, you need to begin now to prepare and plan for that possibility. Waiting until the last minute may well put you in the unfortunate position of losing all your assets to pay for such extraordinarily expensive long-term care.
Most people rely on Medicaid to pay for nursing home care. But what you may not realize is that Medicaid has very strict limits on the number of assets and income you can have in order to qualify for its assistance. For instance, your assets must total no more than $2,000 to qualify as an individual. To qualify as a couple, you and your spouse must own no more than $4,000 worth of assets. Your vehicle alone is probably worth more than that. What to do?
Medicaid spend down
US News reports that you can qualify for Medicaid by means of an estate planning strategy known as a Medicaid spend-down. This perfectly legal strategy allows you to use one or more methods, such as an irrevocable trust, to “spend down” the number of your assets so as to qualify for Medicaid.
The most important thing to remember about a Medicaid spend down is that the sooner you do it, the better off you are. Why? Because Medicaid officials have the authority – in fact, the duty – to review all of your financial transactions that occurred during the five years before you apply for Medicaid. Called the look-back period, they look for any financial transactions or asset transfers that smack of fraud or deliberate impoverishment. If they find one, they deny your application.