Important planning issues regarding Medicaid

On Behalf of | Feb 12, 2021 | Estate Planning

Perhaps you are one of many adult children in Nevada who are currently trying to help an aging parent plan for long-term care. The elder population often encounters Medicaid challenges and other problem issues that can impede one’s eligibility or delay entrance into an assisted-living facility. Every state has its own Medicaid and long-term care guidelines, which is why you’ll want to seek clarification about the laws in this state so you can help your loved one make informed decisions.

The issue of Medicaid is complex, which is why it’s a good idea to speak to someone well-versed in such issues before your parent signs any legal documents. Your parent’s countable and non-countable assets figure heavily into the equation of eligibility. If your parent owns too many assets in order to qualify for Medicaid, you may want to research various ways to transfer countable assets to non-countable assets.

Learn more about revocable versus irrevocable trusts

If your parent has a revocable trust in place, then he or she may make changes, update or cancel the trust at will. Because of this, the funds of a revocable trust are considered countable assets that help determine whether your mother or father qualifies for Medicaid.

On the other hand, if your parent opens an irrevocable trust instead, then he or she loses access to the funds. However, such funds are not countable assets when determining Medicaid eligibility. You’ll also want to learn more about Medicaid’s “look-back” policies, which, in most states, would pertain to irrevocable trust funds.

A brief explanation of the Medicaid look-back policy

As you help your aging parent execute a long-term care plan, it’s important to understand Medicaid’s look-back policy. This is a policy wherein the government reviews your mother’s or father’s financial background to check if he or she gifted, transferred or sold any assets in recent years. If so, it may delay his or her entrance into a nursing home.

You’ll want to be sure to review Nevada look-back policies because some states search as far back as five years while others only check the most recent 30 months. If your parent creates an irrevocable trust to preserve assets for you or other family members, the trust’s funds are not countable assets but are indeed subject to the look-back policy.

A major benefit of using irrevocable trusts in long-term care or estate planning

Your parent’s remaining assets will be subject to the Medicaid Estate Recovery program after his or her death. This program grants Medicaid the right to use money from your parent’s estate to recoup funds it used to cover your parent’s expenses.

If your parent uses an irrevocable trust to protect assets, the funds of the trust are not subject to Medicaid Estate Recovery, meaning Medicaid cannot take those funds to recoup the money paid by Medicaid on your parent’s behalf. It’s a good idea to seek clarification of any long-term care, Medicaid or estate issues you or your parent do not fully understand.