Long-term care can wipe out the money and assets you have earned throughout your life even before you use Medicaid to pay for a nursing home. Asset protection offers you a way to keep your earnings while still using Medicaid to pay for elder care. There are many different paths and options available to protect your assets.
What Is Asset Protection?
Asset protection applies to various methods for you to protect your money, assets and property when it is time for you to consider long-term care or move into a nursing home.
Since Medicare does not cover long-term care, Americans must use Medicaid to receive that coverage.
But since you only qualify for Medicaid when your money and the value of your assets drop below a certain level, you may be forced to use up your life savings before Medicaid pays.
Asset protection offers you a chance to safeguard your money remove it from the equation so, when the time comes to begin receiving long-term care, you can opt for Medicaid right away.
Who Should Plan for Asset Protection?
If you have assets, then they are worth protecting. Asset protection involves more than just creating a savings account or stowing your money away. It’s a chance to protect a lifetime of work.
As you prepare to subsidize your living and go into elder care or a nursing home — or if you provide care for a parent or loved one who will need those considerations — asset protection can help you hold onto your property and money.
It can also give you a chance to pass that on to your children and grandchildren instead of it all being expended before you can move to Medicaid.
Asset Protection Tips
One of the best tips for asset protection is to start your estate planning as early as possible. The closer you get to retirement or moving into a nursing home without estate planning, the fewer options will be available to you and the worse off you will be.
It’s also important to not treat asset protection as an alternative to insurance. That’s not the way insurance works and it can put you in an incredibly precarious situation.
You should also be ready to separate your personal and business assets. You have different options for each type and they are also viewed differently under the law in some cases.
There are also options available to you around what Medicaid does and does not count when determining if you qualify. According to AARP, Medicaid qualification doesn’t include a home that is your primary residence, a car or different types of trusts. This opens up several more potential opportunities to qualify for Medicaid while protecting your assets.
A land trust allows you to place your property within a trust, assigning ownership to someone else. Hence, the property no longer technically counts as part of your current assets.
There is also offshore asset protection, where you essentially form a trust outside of the United States and place some of your assets in it.
You could also set up an annuity, which allows you to protect and grow your assets while even potentially converting them into a set stream of income.
Situational Asset Protection
There are many different situations and scenarios you may encounter where asset protection could come into play. You have different courses of action or opportunities for each of them.
If you are facing a lawsuit, you may want to look into an elder care law attorney. These attorneys advocate for and protect older Americans and can help you through whatever lawsuit or issue you may face.
Protecting Your Elderly Parents
Your parents may have worked hard to build their assets and could be at risk of losing them if they don’t qualify for Medicaid, which they will need for long-term care. You can handle this issue through a durable power of attorney to protect the assets of your parents.
Divorces can naturally have a massive impact on your assets and financial planning if you are older, retirement planning or close to moving to a nursing home or long-term care. Asset protection can be critical in these situations.
Medicaid and Medicare
One point that is critical to keep track of is the five-year lookback period. When determining your eligibility, Medicaid can penalize you for any gift or transfer of assets within the last five years.
If you are more than five years out from needing long-term care, you can make changes to your assets now without worrying about an eventual penalty.
Many of these scenarios, from lawsuits to divorces, can result in having to deal with creditors. Asset protection that took place prior to when the issue arose can help you hold onto your money and property in these situations.
Asset Protection Changes by State
How you qualify for Medicaid and what counts as your assets can vary by state. For example, according to the Kaiser Family Foundation, Wisconsin provides Medicaid eligibility to adults up to the poverty level.
This isn’t the case in other states, meaning individuals who qualify in Wisconsin wouldn’t be in the same circumstances in a state like Florida or North Carolina.
If you plan to protect your assets in relation to Medicaid and long-term care, be sure you’re aware of your state’s specific rules.
Resources for Asset Protection
To determine which state rules apply to you and how your home state handles Medicaid eligibility and qualification, you can check the rules on Medicaid’s website.
You can also learn more about asset protection planning, the options available to you and where you can legally protect assets at the American Bar Association.
Learn more about elder law attorneys, their services and how they can help you on FindLaw.com.
5 Cited Research Articles
- Garfield, R. (2021, January 21). The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid. Retrieved from https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/
- Salopek, J. (2019, October 24). Medicaid Coverage for Nursing Homes. Retrieved from https://www.aarp.org/caregiving/financial-legal/info-2019/medicaid-nursing-home-coverage.html
- Eghrari, M. (2014, August 1). The Medicaid Look Back Period Explained. Retrieved from https://www.forbes.com/sites/markeghrari/2014/08/01/the-medicaid-look-back-period-explained/?sh=645cee511364
- Alper Law. (n.d.). Offshore Trust – Foreign Asset Protection Guide. Retrieved from https://www.alperlaw.com/florida-asset-protection/offshore-trust/
- DeLoach, Hofstra, Cavonis. (n.d.). Asset Protection and Medicaid Planning. Retrieved from https://www.dhclaw.com/library/protecting-your-assets-from-the-nursing-home-in-florida.cfm