For many people, estate planning is synonymous with creating a will. They view an estate plan as a way to establish a personal legacy or to provide resources for their children or other dependents. Estate planning is certainly about the importance of planning for death and the impact that one person’s passing can have on others.
However, estate planning frequently also involves addressing what happens as people age. Medicaid planning can be an important element of estate planning. Particularly for those reviewing or creating estate plans as they prepare for retirement, addressing future medical needs and planning for Medicaid is common.
Why Medicaid planning matters
Most older adults rely on Medicare to cover basic Healthcare expenses. However, Medicare has numerous limits. People need supplemental plans. In some cases, they may need to be ready to apply for Medicaid. Long-term and expensive services like in-home nursing support and a bed in a nursing home aren’t eligible for Medicare coverage. Only Medicaid pays for such expenses if people require ongoing support.
People need to plan to qualify for Medicaid so that they have the medical support they require later in life. Otherwise, whatever remaining assets they have in their name could be at risk of liquidation to pay their medical bills, and they could be at risk of a penalty if they don’t plan well before applying.
Medicaid estate recovery efforts can force the sale of someone’s house and the transfer of other valuable property. If people require Medicaid coverage, what they leave for their families can shrink substantially before and after their passing. Medicaid planning at least five years before benefits are necessary is the best solution for most aging adults.
In many cases, Medicaid planning also helps protect someone’s legacy. They can feel confident about leaving certain assets for their family members if they protect those resources from estate recovery efforts. While many older adults hope they never need Medicaid, planning ahead of time just in case can be smarter than hoping for the best-case scenario later in life.
Addressing a variety of financial and legal concerns while estate planning can give people greater long-term protection and enhanced peace of mind. A thorough estate plan includes documents that protect someone as they age, not just documents that address the inevitability of death.