Personal Assets And Medicaid Applications, Part 1: Homestead
Many older folks are understandably fearful of outliving their assets.
After all, a dignified retirement can all too easily slip away under the weight of financial pressures - especially if you run into health problems that require expensive medical treatment or extensive caregiving.
That is why certain government programs - particularly Medicaid - try to provide some assistance to eligible people. But does qualifying for such a program mean you have to give up virtually all of your own assets?
In this two-part post, let's think through some of the considerations involved in answering that question.
Keep in mind that the various federal rules on qualifying for Medicaid can be quite complicated.
The relevant calculation isn't only about your total amount of assets. This is because some assets are considered exempt for purposes of establishing Medicaid eligibility. If an asset is exempt, it means you can keep it without interfering with your application for Medicaid.
For example, equity in a personal residence is generally considered exempt for Medicaid purposes. This amount may be capped under state law; in Michigan, this so-called "homestead" amount is set at $500,000. But this is still a good example of how Medicaid does not necessarily require you to give up all of your assets in order to qualify for benefits under the program.
When you stop to think about it, an exemption like this is only fair. Someone who worked hard and paid taxes for so many years should not be faced with becoming a pauper in order to get a helping hand from the government.
In part two of this post, we will take note of other exempt assets. We will also contrast them with nonexempt assets.
Please visit our page on Medicaid planning.