Q
What is Medicaid Planning and Asset Protection?
A
Medicaid is the single largest payer for nursing home care in the United States. Medicaid is a joint federal and state program. Medicaid is a needs based program available to those meeting certain asset and income tests. Generally an individual’s assets may not exceed $2,000 and his or her income cannot exceed approximately $1,500 per month. However, certain assets and certain income may be exempt or non-countable for purposes of Medicaid. Proper planning may permit the conversion of non-exempt assets to exempt assets. In many cases, proper planning may save the family home. In addition, an individual is permitted under the Medicaid rules to gift assets to family members and wait for a “penalty period” before qualifying for Medicaid. Federal legislation also provides protections for a spouse living in the community when the other spouse must enter a nursing home facility. Certain levels of assets and income are protected and an elder law attorney may be able to increase these amounts through planning or advocacy.
F: Medicaid Qualifying Annuities
Over the past few years there has been a significant increase in the use of single premium immediate annuities in financial and estate planning. Many Americans use tax deferred annuities to protect assets and avoid Medicaid seizure. In many cases immediate income annuities are used. These annuities are very effective when used in the right situations. In situations where assets exceed the allowable limits, converting assets to an immediate annuity stream may be beneficial. The lifetime annuity option with no period certains or refunds guarantee that the income stream will cease at the death of the annuitant. One also must be careful because when an income continues to the heirs of an estate after the demise of the Medicaid recipient that income may be subject to recovery by the state. When using a Medicaid qualifying annuity for this purpose the annuity income stream must begin prior to application for Medicaid. The annuity also must have a life expectancy that is congruent to that of the one used by the Social Security administration. In all cases you must be very careful to ensure that all of the above criteria are met when using a Medicaid qualifying annuity.
F: Money Management
The process of budgeting, saving, investing, spending or otherwise in overseeing the cash usage of an individual or group. The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans
F: Pension & Retirement Plans
Retirement income is commonly likened to a three-legged stool because it comes from three equally important sources: Social Security benefits, personal savings and investments, and employer-sponsored retirement plans. Once that's said, the subject becomes increasingly complex, due in large part to the Internal Revenue Code (IRC), our federal tax laws. The government gives favorable tax treatment to certain kinds of savings in order to encourage them, such as individual retirement accounts. The IRC dictates when and how much money individuals can put into such plans and when and how much they can or must withdraw, in order to receive tax deductions, deferral, or exemption. Many types of retirement plans are named after the sections of the IRC that regulate them, such as 401(k), 403(b), and 457. The name of the plan refers to its tax status, and usually (but not always) is independent of the vehicle (e.g., a mutual fund, an annuity) in which the money is invested. The phrase employer-sponsored retirement plan is sometimes used instead of the word pension. This includes plans like the 401(k). In some plans, employees make all the contributions; in others, employers also contribute. Personal savings and investments can be in any form—IRAs, CDs, savings accounts, annuities, or others—regardless of their tax status.«
