There are many people live in Abington Township and the other communities surrounding Philadelphia who face what some might call a middle class squeeze when it comes to their long-term care planning.
On the one hand, despite hard work and careful spending, they may still not have the money they need to pay for the cost of a stay in assisted living for any length of time.
On the other hand, they have too many assets, and make too much, to enroll in Medicaid. As a program that provides medical care to those who cannot afford it, Medicaid only accepts applicants who have very little income and assets to their names.
While Medicaid ultimately will pay for long-term care, it might seem that the only option is really unattractive.
A person would have to burn through their life saving to pay for their care and then, after they have lost everything, finally get on a government program their tax dollars helped support.
Medicaid planning strategies are legal ways people can use to avoid this situation. With proper Medicaid planning, a person can both get on the government program and legally pass at least some of their legacy on to loved ones.
Medicaid planning is not one size fits all. A Pennsylvanian who has questions about it should make sure they understand how the law applies to their situation.
What are some common Medicaid planning strategies?
Still, the are some common techniques people use. Here are some examples:
- If they do it far enough in advance, planned gifting is allowed. However, giving away assets within the 5 years running up to enrollment can result in penalties.
- There are certain expenses that are not subject to penalties, like purchasing a prepaid funeral plan or making certain improvements to one’s home.
- A person may enter an agreement with someone, including a relative, to provide personal care for them. They may pay their caregiver a reasonable rate of pay without a penalty.
- Some people choose to pay down their debts, including their mortgage, in order to trim down their assets.
- Sometimes, it makes sense simply to transfer assets and arrange to pay for any penalty.