You may have heard of Medicaid planning and wondered whether it is something you need to incorporate into your estate plan. People often make the mistake of assuming that since they are healthy now there is no reason to worry about Medicaid planning at this point in life. That assumption is incorrect and could come at great cost. The truth is that it is never too early to start incorporating Medicaid planning into your estate plan. The earlier you start the better you will be able to protect your assets and ensure that you will qualify for Medicaid should you need it down the road.

Medicaid is a federally funded and state administered healthcare program. People often associated Medicaid with health insurance for the poor. It is true that Medicaid provides health insurance to low income families and individuals; however, Medicaid also provides benefits to the elderly if they qualify. The elderly also have income and asset limits that cannot be exceeded to be eligible for Medicaid benefits. The asset limit can be as low as $999 for an individual. For most retirees, the asset limit is easily exceeded after a lifetime of working and savings.

Why is qualifying for Medicaid even necessary? The primary reason why older individuals need to qualify for Medicaid benefits is because Medicaid covers the costs associated with long-term care – something that most private health insurance plans and Medicare do not do. The longer you live the greater your odds of needing long-term care. With the average cost of a year stay in a long-term care facility running over $75,000, and the average length of stay running about 2.5 years, the need for Medicaid benefits becomes clear.

If your countable assets exceed Medicaid’s asset limit you will be denied coverage until you have depleted those assets by paying for your medical care out of pocket. Transferring the assets to a family member or loved one is not an option because Medicaid uses a five year “look-back” period when evaluating an application for benefits. Essentially, this means that any asset transfers made during that time period will be credited back to you.

Medicaid planning focuses specifically on protecting those assets while putting you in a position to ensure that you will qualify for Medicaid should you need it in the future. It is never too early to discuss the incorporation of Medicaid planning into your overall estate plan. Consult with your Missouri estate planning attorney as soon as possible for additional information.