Medicaid Asset Protection

Many older people and individuals living with disabilities require significant medical assistance. Long-term care can be expensive, and many people worry that the assets they spent a lifetime accruing will be whittled away by medical costs or prevent them from receiving Medicaid. Fortunately, there are actions people can take to qualify for Medicaid while safeguarding their property. If you have concerns regarding your Medicaid eligibility, you should speak to an attorney about your Medicaid asset protection options. The knowledgeable LaGrange estate planning attorneys of Wilson & Wilson can assess your circumstances and advise you of the measures available to help you shield your property. We frequently counsel people in LaGrange and other cities throughout Illinois on estate planning issues.

Medicaid is a program funded by state and federal governments that pays for medical assistance for certain individuals. In Illinois, only people that are Illinois residents and are in need of health care or insurance and pass a means test are eligible for Medicaid. Essentially, only those people who have low income and limited assets qualify. Notably, only people who are lawfully in the United States can receive Medicaid, which means they must be a United States legal alien, citizen, permanent resident, or national. Finally, they must either be blind, pregnant, responsible for a child that is 18 or younger, suffer from a disability, live with a family member with a disability, or be 65 or older.

What constitutes low income is based on an applicant’s pre-tax earnings and the number of people in his or her household. Certain individuals who have income in excess of the limit may qualify for Medicaid if they spend the excess income on medical bills, which is known as a spend-down. For example, if a person’s monthly income is $1,000 over the Medicaid eligibility limit, and he or she spends $1,000 per month on medical care, the rest of the bills will be covered by Medicaid. Certain assets are not taken into consideration when determining a person’s need and are exempt from liquidation. Non-exempt assets generally must be liquidated and used to pay for medical care until the individual meets the non-exempt asset limit of $2,000 per person, however.

Many people who have assets over the Medicaid eligibility limit worry that they will have to liquidate their property to pay for long-term medical care. Fortunately, Medicaid asset protection trusts can often help people protect their property while meeting the Medicaid eligibility requirements. Medicaid trusts are exempt assets because their terms render the property within the trust unavailable to the Medicaid applicant and his or her spouse. The trust must be irrevocable, and neither the application nor his or her spouse can receive distributions or maintain control. Property that is within such trusts is not considered when determining Medicaid eligibility. If a Medicaid asset protection trust is structured properly, any income earned by trust will remain in the trust and will not constitute income for purposes of Medicaid eligibility.

It is important to note, however, that there is a five-year look-back period for Medicaid, which means that the government will assess any transactions that occurred over the five years prior to the Medicaid application. Gifts and unverified transfers, which are transfers for less than fair market value, are not permitted and will result in the imposition of penalties. The transfer of assets to a Medicaid asset protection trust produces a penalty, as it is considered a gift. Thus, any transfer should be made five years prior to applying for Medicaid.

Many people worry that their assets will prevent them from receiving Medicaid, but there are ways people can protect their property and obtain Medicaid benefits. If you are interested in Medicaid asset protection, it is smart to meet with an attorney as soon as possible. At Wilson and Wilson, our seasoned LaGrange attorneys help people use estate planning tools to their advantage, and if you engage our services, we will work tirelessly on your behalf. Our main office is in LaGrange, and we also have a second office in Northbrook. We have satellite offices in Orland Park and Warrenville as well, where we are available by appointment. We routinely help clients with estate planning issues in Cook County, including Chicago, Arlington Heights, Cicero, Hoffman Estates, Mount Prospect, Palatine, Schaumburg, Evanston, Skokie, and Tinley Park, DuPage County including Naperville, Aurora, and Wheaton, and Lake County including Buffalo Grove, Mundelein, Highland Park, and Waukegan. You can reach us via our online form or at our LaGrange office at (708) 482-7090 or our Northbrook Office at (847) 656-8958 to set up a conference.