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ILITs Unveiled: Estate Planning
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In 2020, the yearly average cost for long-term care in the U.S. was around $19,240 to $105,850, depending on the type of long-term care rendered. Undoubtedly, only a few seniors or individuals requiring long-term care can afford such huge expenses comfortably. And if you consider the fact that many seniors are retired, you will understand why coughing out $19,240 or $105,850 for long-term care expenses will be difficult for them and even their loved ones who may have personal expenses.

Due to the expensive nature of long-term care in the U.S., many individuals are considering a government-funded program known as Medicaid. This program is designed for seniors, low-income families, disabled individuals, and a host of other persons.

Qualifying for Medicaid

Medicaid, like some other government-funded programs, comes with specific eligibility requirements. Your assets and income must be below a certain threshold to be eligible for this program. However, you still have a shot at enjoying Medicaid benefits if your assets and income are above the threshold hold, but to qualify, you will have to set up a Medicaid asset protection trust. A Medicaid asset protection trust is designed to protect your assets and allow you to qualify for Medicaid.

What is Medicaid?

Medicaid is a public health insurance program for seniors and low-income individuals. This program covers 1 in 5 Americans with complicated and costly healthcare needs.

Medicaid is the primary source of long-term care coverage in the United States. A considerable percentage of Medicaid enrolled don’t have access to other affordable health insurance due to financial reasons. Medicaid covers almost a fifth of all personal healthcare spending In the United States, providing considerable financing for hospitals, community health centers, physicians, and nursing homes, including jobs in the healthcare industry.

To enjoy Medicaid benefits, you need to be eligible. However, determining your eligibility can be complicated, not to mention what the program covers and how to apply. This guide explains what a Medicaid protection trust is and how it works.

What is Medicaid Asset Protection Trust?

As the name implies, a Medicaid asset protection trust is tailored to protect assets from being counted for Medicaid eligibility. A Medicaid asset protection trust allows an individual to qualify for long-term care benefits from Medicaid while safeguarding assets from being used up if long-term care is required.

How Does Medicaid Asset Protection Trust Work?

After qualifying for Medicaid, you will be provided with a medical card and benefits that you can use. It is just like health insurance coverage from an insurer. The only difference between the two is that Medicaid is free.

Determining eligibility for Medicaid can be complicated. In addition, understanding how it works can be pretty tricky as well. If you wish to apply for Medicaid, don’t hesitate to contact a Medicaid attorney or an elder law attorney.

So, back to the crux of this article, How does Medicaid asset protection tryst work?

Also regarded as an Income only trust, a Medicaid asset protection trust designates an individual other than you or your spouse as the trustee, usually one or more adult children, and restricts you to the income. The principal must be unavailable for it to be protected.

A MAPT is ideal for the family home and the assets the client is only taking the income from or is reinvesting. The Medicaid applicant lifestyle is unaffected since they continue getting their pension and Social Security Checks directly. They retain the right to use and occupy the home. In addition, they preserve the tax exemptions on the home. The trust may sell and trade assets via the trustee designated by the potential Medicaid applicant. However, the parents keep some measures of control by retaining the right to alter the trustee if they are unsatisfied.

The Medicaid Asset Protection Trust is subject to a look-back period of around five years. This denotes that if assets are sent to the trust, and the potential Medicaid applicant requires nursing home care at any time after five years, the assets in the trust are protected. Nevertheless, it is best to get started since you receive credit for the time you accumulate, even if you don’t make the five years. For instance, if the potential Medicaid applicant requires nursing care, they must pay for the one year remaining.

Need a Medicaid Lawyer?

If you need a Medicaid lawyer, don’t hesitate to contact us. We boast of some of the best Medicaid lawyers, and they can set up a Medicaid asset protection trust and handle issues related to Medicaid.

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