Your Family Matters

Three tips for effective Medicaid planning

On Behalf of | May 2, 2024 | Estate Planning

One way to ensure that your estate plan covers your long-term care costs is to reduce your assets to the point that you qualify for Medicaid benefits. If you’re successful here, then the government will step in to cover a large portion of your bills. But you have to be careful with how you reduce your assets to the point of qualifying for Medicaid, otherwise you could get hit with a penalty that will delay your ability to pay for the care you need.

The Medicaid lookback period

In Illinois, the Medicaid lookback period is five years. This means that the government will look at your financial transactions for the last five years to see if you’ve improperly transferred property to qualify for Medicaid. If it’s determined that you did, then your eligibility will be delayed. How can you avoid this from happening to you? Here are some options:

  • Spend down your assets prior to the lookback period kicking in, which may include expending resources on exempt property, such as your home, medical equipment, and burial plots.
  • Place assets in an irrevocable trust, whereby you lose control of your assets but you protect them from being recouped to cover Medicaid expenditures.
  • Purchase an annuity that will assist with spending down your assets while protecting yourself from losing money you paid for long-term care, especially if you were penalized for transactions effectuated during the lookback period.

Competently plan for your future care

Your long-term care needs can eat up most, if not all, of your estate unless you carefully plan to cover those costs. With that in mind, don’t wait too long to start thinking about how to cover your long-term care expenses. If that’s something that you need assistance with, then please continue to read our blog and our website and be sure to seek out any additional guidance that you may need.