Personal Assets And Medicaid, Part 2: Is The System Humane?

In the first part of this post, we began discussing the financial dilemma that many older people with serious health issues feel they are in.

Someone may have worked their whole life - only to face the prospect of being unable to pay for the health care or caregiving that they need without government assistance.

If you are in that situation, do you really have to give up virtually all of your assets? Fortunately, the system is supposed to be more humane than that.

In this part of the post, let's delve further into the role of exempt assets in Medicaid planning decisions.

As we noted in the first part of this post, Michigan has a homestead exemption that runs up to $500,000. This means that if you need to apply for Medicaid, you may be able to keep the value of a residence up to that amount.

Of course, there are numerous factual questions involved in applying Medicaid coverage guidelines to one's personal circumstances. For detailed information from the federal government about qualifying for Medicaid, click here.

Much may depend on your particular state's Medicaid guidelines. Though Medicaid is a federal program, it is administered by the states and is subject to some variation from state to state.

Michigan distinguishes between exempt and nonexempt assets. Exempt assets are those you can keep without losing eligibility for Medicaid.

Besides homestead, examples of nonexempt assets include a motor vehicle (though only one), household appliances and certain types of trusts.

Keep in mind, however, that there is an important difference between trusts that are revocable and trusts that are irrevocable. A revocable trust is one in which the person who created the trust retains the authority to alter it - and thus cannot really be classified as an exempt asset.

Nonexempt assets are generally liquid, in the sense that they can be converted to cash without too much difficulty. Bank accounts and investment funds are good examples of this. But real property can be appraised and sold as well, as there is no exemption for real estate other than a primary residence (homestead).

In short, if you feel you need help from Medicaid, don't despair. You do not necessarily have to give up everything you own to qualify.

For more information, please visit our page on Medicaid planning.

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