Medicare… While most of us do not aspire to spend our golden years in a nursing home, this fate often becomes our reality.  

For families in this situation, the question turns to, “how are we going to pay for this?”

Many clients believe Medicare will pay for it. The truth is it is complicated. Medicare will only pay for up to 100 days of long-term care after a three-night stay in a hospital. 

So, what happens after 100 days? 

Medicare

You either pay privately, or out-of-pocket, or attempt to qualify for Medicaid. Medicaid is the only government needs-based benefit that will pay for long-term care. Unfortunately, to qualify, you essentially have to be broke. This means you have drained all your hard-earned assets and have eliminated any inheritance you had hoped to leave to your children.

Depressing? Absolutely. 

However, there are steps you can take to preserve some of your assets while still qualifying for Medicaid. 

The creation of a Medicaid Asset Protection Trust is one of those steps. 

Over the years, many of my clients have put their primary residence, vacation homes and stocks—valuables that are earmarked for their children—into a Medicaid Asset Protection Trust. This type of trust allows you to “wall off” or protect certain assets from ever being spent on a nursing home or any other form or long-term care. 

Why not just gift the assets to the kids now? Assets in the trust are still under your control. With a gift, once you give it, it’s gone forever, and you may come to need that money. 

Medicare
  1. Assets within the trust are protected from the kids in case of divorce, spendthrift habits, creditors, substance abuse issues, bankruptcy, and lawsuits. 
  2. Assets within the trust get a step up in basis upon your death. Highly appreciated assets will incur a capital gains tax if gifted outright. 
  3. If you do not make the “Five Year Lookback Period,” you will be able to get that asset back if it is in a trust. 
  4. You will achieve peace of mind, as you know that asset is safe from any unforeseen issues, and safe from the nursing home.

For further information on whether a Medicaid Asset Protection Trust is right for you and your family, please contact our office at: (978) 269-4485 or email me at: jebacher@teric7.sg-host.com and we will be happy to help.