Medicaid Pre-Planning: How Is It Possible?

by Jerrold Bartholomew

Checkerboard PlanningThere are two apparently contradictory themes running throughout this blog and indeed the field of elder law in general. On the one hand, one is regularly advised to plan ahead for long-term care needs with asset protection trusts and similar techniques. On the other hand, the law changes so rapidly in Medicaid qualification that pre-planning seems impossible. For just a few examples consider that recently a cap has been placed on the value of the automobile you can buy, the state has to be named as a remainder beneficiary on annuities, and estate recovery has been enacted. The list of changes is seemingly endless and the pace of change is rapid. So how is it possible to advise people to plan ahead when the law could be different tomorrow?

The answer to this paradox is that while there are frequent changes in Medicaid qualification law, the changes are related to what is considered exempt when qualifying for Medicaid. But if the asset is no longer in the applicant’s name, it cannot be regulated by rule changes. Put another way, if your assets are in the name of a trust, you do not have to worry about changes in the rules affecting those assets. The rules don’t apply to assets that are not held in your name.

Michigan’s estate recovery law is currently under review in Washington. Exactly what form the law takes will be unclear for some time. And even once Michigan establishes clear rules for estate recovery, it is entirely possible that the rules will become more strict. Yet for those who have placed their home in an irrevocable trust, the final form of estate recovery does not really matter. Once the five year look back period has passed, the house will be fully protected from the estate recovery program.

It is still very possible to plan ahead even as the rules are changing. Indeed, because the rules are constantly changing to become more strict, pre-planning makes all the more sense.

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