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.
Medicaid in Illinois: Protection of the healthy spouse's assets and income | 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.
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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.
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.
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