Medicaid Asset Protection

By Peter Emerson
Asset protection for Medicaid includes a set of legal techniques for protecting your assets by transferring them to another person or trust, and thereby qualifying for Medicaid.

Medicaid is a federally funded health plan that pays for long-term nursing home costs. This is designed for the advantage of those without resources and who have no medical insurance coverage.

The financial effects can be shocking, since the medical expense quickly consume most families' personal finances. In order to protect personal assets, Medicaid applicants can transfer assets before entering a nursing home.

Medicaid asset protection involves preparing a thorough plan. You can gift your assets to close family members or to an irrevocable trust so as to lessen the amounts available and thereby qualify for Medicaid benefits. Generally, for penalty purposes, there is a three-year 'look-back' period for transfers to an individual and a five-year 'look-back' time for transfer to a trust. Transferring carried out during the look-back periods incurs a penalty that is normally a period of disqualification for Medicaid.

Planning for Medicaid asset protection also involves several tax considerations connected to income tax and gift tax. A Medicaid plan is normally designed to get major tax savings. But, failure in following tax laws will result in payment of extra taxes.

It is ideal to work with an experienced Medicaid lawyer who is adept at officially rearranging your assets to make you eligible for Medicaid. Proper planning can guarantee security for your significant assets at any time, even after a family member has entered a nursing home.