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  • Nicole J. Zuvich

Plan carefully for long term care

Updated: Sep 27

A good estate plan doesn’t just cover what happens after you are gone. It is also concerned with planning for your future. Part of this involves planning for the possibility that you will need long-term care. Many people build this part of their estate plans around the concept of Medicaid planning.

What is Medicaid?

It’s common for people to confuse the two similarly named federal health insurance programs Medicare and Medicaid, but in fact they take different approaches to who and what they cover. Understanding these differences is important for anyone who is putting together an estate plan.

Medicare is a type of health insurance available to most Americans 65 or older. Workers pay into the system during their working years and get to enjoy its benefits when they get older. Medicare covers many types of health care, including in-patient care at hospitals and in-home care. However, it doesn’t cover everything. Many people supplement their Medicare coverage with another insurance plan.

Unlike Medicare, Medicaid eligibility is based on the applicant’s financial resources, rather than just their age. People over 65 and many people younger can be eligible for Medicaid so long as their income and means fall below a certain level.

The means test and Medicaid planning

For the purposes of estate planning, one advantage of Medicaid is that it can help pay for long term care and other costs Medicare does not cover. Long term care is expensive, and most people can use any help they can get to pay for it. But if their income and means are above the threshold, they are ineligible for Medicaid. They may have to pay for the care out of their own pockets.

A good estate plan can help people get around this problem by managing their assets through trusts or other tools. The plan helps the person pass the means test for Medicaid eligibility so they can get the help they need for long-term care.

There is a lot to think about when crafting an estate plan. It’s a good idea to speak to an estate planning attorney about planning for long-term care.

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