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Plan now for a time when you might need Medicaid

Understanding how eligibility works for government programs such as Medicaid might feel like trying to read the tax code. The word "confusing" just doesn't cover it. Someone might tell you that your eligibility depends on your medical need, income and level of assets, but what that actually means for you probably doesn't make it any clearer.

The cost of medical care and long-term care in the United States continues to rise to a level that makes it difficult to afford even if you have significant wealth and assets. It's not just older people who need to consider these issues either. You probably know at least one person who suffers from a catastrophic illness such as cancer or someone who suffers from a debilitating injury. These conditions don't discriminate based on age.

You can protect your wealth and assets for future generations by taking advantage of the appropriate estate planning tools well in advance of when you might need Medicaid. The right estate plan could help ensure that you meet the financial requirements for Medicaid, or any other government program, when the time comes.

Financial qualifications for Medicaid

In 2010, the Affordable Care Act changed the financial eligibility requirement for Medicaid. Until and unless the current administration changes this methodology, your eligibility depends on your Modified Adjusted Gross Income, which relies on tax relationships and taxable income. This change did away with the asset and resource test used previously. Of course, as with any other government program, exceptions exist for the following groups of people:

  • Blind individuals
  • Disabled individuals
  • Individuals age 65 or older

The financial eligibility requirements used by the Social Security Administration when approving benefits from the Supplemental Security Income program apply to these groups. If you already receive benefits from another government program such as SSI, you aren't required to meet Medicaid's criteria. Even if you meet the financial requirements for Medicaid, you must meet other criteria as well.

Non-monetary eligibility requirements

In order to receive Medicaid, you must also be a U.S. citizen or eligible non-citizen (legal permanent resident) and reside in the state in which you will receive benefits. Your age, parenting status and pregnancy could also limit your ability to obtain benefits.

Other issues associated with Medicaid

When applying for Medicaid, you need to consider the following potential issues or roadblocks as well:

  • The needs of your spouse
  • Third-party liability
  • Trusts
  • Asset transfer limitations
  • Waiver and demonstrations
  • Estate recovery

This article merely outlines the basics of applying for Medicaid. Considering the myriad of exceptions and alternative methods of qualifying for Medicaid, you will more than likely need some help creating a plan that keeps your options open when the time comes. A Delaware estate and Medicaid planning attorney can delve into the specifics surrounding your situation and help you devise such a plan. Estate planning revolves around the concept of preparing for the future, so any comprehensive plan should consider the necessity of Medicaid at some point. Failing to do so could end up costing you and your heirs.

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