As you get older, your legacy can take on new importance. What will you leave behind? How will your loved ones fare? One way to address these issues is to start some planning now.
Part of this planning can mean managing your assets to increase the likelihood of qualifying for Medicaid if you ever require long-term care. Eligibility for this program means being within the income and asset limits, which you may not if you have too much money or property.
Understanding the limits
Per Colorado laws, a single individual must not have more than $2,000 in resources. This limit is higher for married spouses ($154,000) and varies based on whether one or both of you are applying for benefits and the type of Medicaid.
Exempt assets
However, not all assets are “countable,” meaning they do not all count toward the resource limits. Some of the most common examples of exempt assets that Medicaid will not take into account include:
- Your home (though there are exceptions)
- One vehicle you or a member of your household uses
- Wedding and engagement rings
- Personal property
- Prepaid funeral plans
- Medical equipment
The value of these properties generally will not count toward the resource limit.
Non-exempt assets
Almost everything else will typically count as resources. Assets that are countable can include:
- Cash
- Investments
- Savings
- IRAs
- Annuities
- Cash surrender value of life insurance
- Additional motor vehicles
- Recreational vehicles
- Non-primary residences
- Stocks and bonds
These assets will impact Medicaid eligibility if they add up to more than $2,000 (if you are single) and $138,000 (if you are married).
How planning can help you protect your property
If you have resources over the asset limits, you may need to spend them down before you qualify for Medicaid. This can be highly upsetting if you want to leave behind property or financial gifts to beneficiaries, which is why it may be essential to start planning now.
Some Medicaid planning strategies include:
- Spending down on exempt assets (e.g. home improvements, new car, funeral plans, etc.)
- Spousal income transfers (converting assets to income for well spouse)
- Gifting and use of “Medicaid compliant annuities”
- Transferring assets and properties early to avoid penalties on transactions made within five years of applying for Medicaid
If you wait too long to explore these and other Medicaid planning options, you could have fewer opportunities and tools to preserve your assets and expedite your eligibility for Medicaid.