According to a recent article in the Wall Street Journal, people planning on using Medicaid for long-term care coverage are facing tougher restrictions. In most states, a person cannot be eligible for Medicaid unless he or she has no more than $2,000 worth of investments, excluding a house and a car. This $2,000 limit includes any gifts that person has given for up to five years.
With Medicaid planning you can structure your assets so you can still take advantage of the Medicaid coverage. However, doing so will require some significant planning steps on your part. Here are a couple of tips.
Tip 1: Use a trust.
Because of the timeline involved, if you want to protect your assets and still be able to receive Medicaid long-term care coverage, you will have to create a trust at least five years before you apply for Medicaid. Further, not just any old trust will do, and you must ensure you create an irrevocable living trust that provides for as many protections as possible.
Tip 2: Use insurance.
If you are not sure you will be able to qualify for Medicaid because of the five-year gift period, you can obtain long-term care insurance to cover the interim period. This insurance will cover the five-year gap so at the end of the five-year period you can apply for Medicaid.