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Estate Planning

Elder Law and Medicaid

Overview of Medicaid for Long-Term Care: Eligibility, and the Look Back Period | Illinois Elder Law

Overview of Medicaid for Long-Term Care: Eligibility, and the Look Back Period | Illinois Elder Law

In this article, we give an overview of #Medicaid for Long-term care. We explain Medicaid income requirements, the Medicaid look back period, and Medicaid eligibility requirements.

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Allowable Transfers Within The Medicaid Look Back Period

Allowable Transfers Within The Medicaid Look Back Period

If you or a loved one is likely to need long term care within the next few years, you should begin your planning as soon as possible.  Because of the high cost of long term care, many individuals rely on Medicaid to pay for this service.  As discussed in our previous article, Transferring Assets to Qualify For Medicaid, in order to be eligible to receive Medicaid benefits for long-term care, you must be able to show that you have already "spent down" the majority of your own assets.  

We also discussed the 5-year look back period.  Generally, if you transfer your assets for less than fair market value within 5 years prior to applying to Medicaid, your eligibility will be delayed by a penalty period.  The length of the penalty period will depend on the amount of assets you transferred during the 5 years prior to applying for Medicaid.  

In previous articles, we discussed how to use Irrevocable Trusts and Life Estate Deeds 5 years prior to applying for Medicaid to remove certain assets from your estate for the purposes of Medicaid while retaining some benefit from the asset for the remainder of your lifetime, and how to plan for Medicaid when you have a healthy spouse.   In this article, we will discuss transfers of your assets that are allowable even if you are within the 5 year look back window.    

You are allowed to make certain types of gifts, or transfers for less than market value, which will allow you to reduce your assets for Medicaid purposes.  These types of transfers allow you to become eligible for Medicaid benefits by gifting your assets to your loved ones without imposing a penalty waiting period.  

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Medicaid: Community Spouse Resource Allowance

Medicaid: Community Spouse Resource Allowance

Most people are aware that in order to apply for Medicaid for long-term care you are required to spend down the majority of your own assets.  In Illinois, in order to be eligible for Medicaid assistance, the recipient must have less than $2,000.00 in non-exempt assets.  But what happens when the Medicaid recipient has a healthy spouse?  States have recognized that, due to the financial burden of long-term care, there should be a mechanism for one spouse to receive Medicaid benefits while the other spouse (called a "community spouse") retains enough income and assets to live on.  This is the purpose for the "community spouse resource allowance" in Illinois. 

Assets held in your spouse's name generally count as your assets for the purpose of applying for Medicaid.  However, In 2016 in Illinois, while the Medicaid applicant or recipient must have less than $2,000.00 in assets, the Medicaid recipient's spouse is allowed to keep $119,220.00 in countable (or non-exempt) assets.  This is called the "community spouse resource allowance."  The Medicaid recipient and community spouse are permitted to retain certain exempt assets in addition to the  community spouse resource allowance.  Exempt assets include:

  • Up to $525,000.00 of equity in the home;
  • Household goods including furniture and appliances; 
  • The Medicaid applicant and his or her spouse can each designate $10,000.00 for burial expenses;
  • Burial plots for the Medicaid applicant and immediate family.  
  • One Automobile (up to $4,500.00 in equity); 
  • Life estate interests in real estate;
  • Personal items such as clothing or jewelry; and 
  • Assets that are not able to be sold despite a good faith effort by the applicant. 
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Illinois Medicaid Planning Explained

Illinois Medicaid Planning Explained

This article is the last a series of nine articles explaining the Eight Goals of a Good Estate Plan.  In this Article we will explain how to use Life Estates and Irrevocable Trusts to make yourself eligible for Medicaid assistance for long-term care without losing your assets and to prevent Medicaid from seizing your assets upon your death.

Assisted living care can be extremely expensive.  Fortunately, if you qualify for Medicaid, the government will foot the bill for this care.  Unfortunately, in order to qualify for Medicaid, you must show that you have already expended most or all of your assets.  You cannot qualify for Medicaid unless you have less than $14,400.00 in countable resources.

In addition, if your estate has remaining assets at the time of your death, the government has the right to seize those assets to pay for you end-of-life care, preventing them from transferring to your loved ones.

5 Year Look-Back Period

Gifts made within five years prior to applying for Medicaid nursing home assistance will disqualify you for Medicaid benefits for a certain period of time depending on the size of the gift.  In addition, any such gifts may be reversed after you pass, allowing the government to seize the assets despite the gift.

Life Estate Deeds and Irrevocable Living Trusts

Life Estate Deeds and Irrevocable Living Trusts can be used to (1) qualify for Medicaid assistance while still preserving your assets; and (2) pass your remaining assets to your loved ones without them being subject to a Medicaid Lien.

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Illinois Medicaid Look Back Period Examined

Illinois Medicaid Look Back Period Examined

Medicaid is a government program intended to pay for long-term care once an individual's assets have been depleted.  Elderly individuals who anticipate the need for institutional or in-home long term care may seek to transfer their assets to loved ones prior to applying to Medicaid in order to qualify for Medicaid and avoid having those assets depleted in the course of their long-term care.  

‍However, there is a five-year "look back" period that allows the state to review transfers made 5 years prior to the date that you apply for Medicaid benefits.  If an improper transfer of assets was made during this period, a "penalty period" is imposed during which your eligibility for Medicaid will be delayed.  The length of the "penalty period" depends on the amount of the transfer.  Certain types of transfers are exempt from the "look back" period, and will not delay your eligibility from Medicaid.

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