Estate Planning for Medicaid 

 Posted on December 16, 2024 in Estate Planning

Considering the high cost of long-term medical care, even if you have never used a government assistance program you may wish to qualify for Medicaid. If so, it is important to give a great deal of thought to crafting an estate plan that allows you to receive Medicaid while still protecting your assets and family. This is due to the unique qualification requirements for Medicaid. An experienced Fort Worth estate planning attorney can advise you on strategies to protect your estate and use Medicaid.

What is Medicaid?

Medicaid (not to be confused with Medicare) is a federal program administered by Texas that helps elderly and disabled low-income individuals obtain long-term medical care. Some of the benefits of Medicaid include:

• Hospital services

• Home health services 

• Transportation to medical care

• Doctors’ services

• Nursing homes

Why Are There Unique Estate Planning Considerations for Medicaid?

In order to be eligible to qualify for Medicaid, both your income and assets together must fall below a certain threshold of $2,829 for an individual or $5,658 for a couple. To qualify for Medicaid you must "spend down" any assets above that amount. If you transfer assets at any time during the five years before receiving Medicaid benefits at less than fair market value, you may be subject to penalties. For example, the Texas Medicaid Estate Recovery Program (MERP) works to get back funds from the estates of Medicaid recipients after their death.

All of this means two things: First, given the very low eligibility threshold, it can be difficult to apply for Medicaid while still maintaining some assets for your family. Second, using Medicaid might put your family at risk of losing assets after your death. This can be complicated by the fact that the rising costs of long-term care may make it necessary for you to qualify for Medicaid, although you may not want that need to hurt your family after you are gone.

How Can You Set Up Your Estate Plan to Protect Your Assets for Medicaid? 

Certain assets in Texas are exempt from consideration for Medicaid eligibility, such as your life insurance, retirement accounts, annuities, and certain types of trusts. A thoughtful estate plan utilizes these exemptions and other strategies to protect your assets and family in the event you need to qualify for Medicaid by implementing strategies such as: 

• Starting estate planning before the five-year look-back period after which Medicaid penalizes the transfer of assets.

• Setting up an irrevocable trust that allows you to both protect assets and use the income for your living expenses.

• Setting up annuities in which you contract with an insurer to pay them a lump sum in exchange for a monthly check.

Contact a Fort Worth, TX Estate Planning Lawyer

If you think you may need to apply for Medicaid, it is important to set up your estate plan to protect your assets for your family while ensuring that you can qualify for Medicaid benefits. At Gonzalez Law, PLLC, our experienced Fort Worth, TX estate planning attorney can advise you on estate planning tools to ensure that your family is provided for and your long-term care protected as well. Call our office at 817-349-7330 for a free consultation today.