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One in three Texas seniors will need long-term care at some point. A Houston Medicaid planning attorney can help you protect your assets while receiving coverage for long-term care services through Medicaid.

What is Medicaid Planning? 

Medicaid planning is a type of long-term care planning designed to protect assets and help people plan for long-term care costs.  Many families underestimate the cost of long-term care. A private room in a nursing home facility can cost $8,000+ per month. Assisted living facilities can cost $4,000+ per month. Medicaid can cover a large share of long-term care costs, but only if you meet strict financial and other requirements. The financial limits for long-term care make it difficult for most people to qualify.

When determining eligibility in Texas, Medicaid will also look at your financial statements from the previous five years. Any indication that assets were transferred for less than fair market value could trigger a penalty period. Most people will have to pay for their long-term care out of pocket until they’ve exhausted most of their assets to meet Medicaid’s limits.
With proper planning, it’s possible to preserve assets while qualifying for Medicaid. The process is a complicated one. Medicaid planning is not a do-it-yourself project.

Who Needs Medicaid Planning? 

Nearly 70% of people aged 65 and older today will need some form of long-term care at some point. The high costs of long-term care make it essential for every senior to consider Medicaid planning.

Meeting income and asset requirements can be challenging for many seniors. Texas considers income from any source when determining Medicaid eligibility, including:

  • Wages
  • Pension payments
  • Alimony
  • Social Security Income
  • Social Security Disability
  • Stock dividends
  • IRA withdrawals

Assets include:

  • Stocks
  • Cash
  • Bonds
  • Credit union
  • Investments
  • Checking accounts
  • Savings accounts
  • Real estate in which you do not reside

Exempt assets (or assets that Medicaid does not consider when determining eligibility) include:

  • Your primary residence
  • Personal belongings
  • Home furnishings
  • Irrevocable burial trusts
  • Your automobile

Texas has an income eligibility cap. Unlike other states, Texas does not allow you to spend excess income on medical expenses to qualify for Medicaid.

When Should I Start Medicaid Planning? 

Planning early on is important. Texas has a five-year look-back period for financial statements, so early planning can prevent a penalty period that would impact your ability to pay for care.

Don’t wait until you need long-term care to start planning for how you’ll pay for it.

What are Some Common Medicaid Planning Tools? 

A Houston Medicaid planning attorney can employ a variety of tools when planning for long-term care and Medicaid qualification.

Medicaid Asset Protection Trust (MAPT) 

A Medicaid Asset Protection Trust, or MAPT, can help protect assets if long-term care is needed through Medicaid. The goal is to ensure that the trust is created and assets are transferred five years before applying for long-term care with Medicaid. If you can meet this goal, Medicaid will not penalize you for transferring assets to the trust and it will not impact your eligibility for Medicaid.

Assets in a MAPT are not considered when determining Medicaid eligibility. These assets also cannot be seized by Medicaid to recover the costs of your long-term care.

A few important things to know about MAPT:

  • Investment assets that are transferred to the MAPT cannot be sold, but you can continue receiving income from them.
  • IRA accounts and qualified plans cannot be transferred to a MAPT, so they must be liquidated to fund the trust.
  • MAPTs are irrevocable trusts, so once your assets are transferred, you lose control of them.
  • All assets transferred to the trust should have a long-term plan and their transfer to family members.
  • A MAPT will protect your primary residence from Medicaid estate recovery.

A Medicaid planning attorney can help you determine whether a MAPT is the right choice for you and how to use it to protect your assets.

Qualified Income Trust (QIT) 

A QIT is another type of irrevocable trust that can help you qualify for Medicaid long-term care services.

The concept is simple:

  • All income that is over the limit is placed into the QIT.
  • Income in the QIT does not count towards your Medicaid eligibility.

A QIT requires a designated trustee who will manage the account and use its funds for certain purposes, such as paying for medical expenses. It’s important to note that a QIT does not help with assets that exceed the Medicaid limit. No one wants to think about the possibility of needing long-term care, but it’s something that most seniors will face at some point. Medicaid planning can help ensure you get the care you need while protecting your assets. Planning is a complicated process. A Houston Medicaid planning attorney can guide you through the process and help find the best solutions for your individual needs.

A Houston Medicaid Planning Attorney Here To Support You

Whenever you find yourself needing to reach out to our office, you can be sure you won’t need to wait for hours or days in order to get a response. Here at Stafford Law Firm, we pride ourselves on being easily accessible and on responding to all client inquiries as soon as possible.

The fact of the matter is, one day you will need to fall back on your estate plan. Whether it will simply be to pass on your family’s wealth after you pass, or something even more heartbreaking like needing a new guardian appointment for your children, having a thorough and customized plan in place will help make sure your family and your future are well taken care of. This plan will often need to include one or several different kinds of trusts, and you can rest easy knowing that an experienced Houston Medicaid planning attorney has your best interests at heart. Reach out today for a free consultation.

Frequently Asked Questions

A Medicaid planning attorney will need to look at your full financial picture in order to advise you on the best way to plan for Medicaid and your eventual long-term care. This means they will need to take into consideration ALL income you receive and EVERY asset you own.

Absolutely. In its simplest form, Medicaid planning is the careful use of your assets and income in order to make sure you can receive the help you need for covering the extremely high costs of long-term care.

Protecting your money from Medicaid truly depends on your particular situation. If you will not need Medicaid for several years, you will likely be able to find ways to protect all of your assets. If you are already receiving Medicaid, your options may be more limited, but there are still steps you can take in order to more comfortably pay for long-term care.