Medicaid can be a crucial benefit for adults in their golden years. Medicare does not provide long-term care coverage in the way people might expect. Those who require a room in a nursing home or who must spend more than a month at a rehab facility may find that Medicare leaves them without the support they require.
The cost of in-home nursing support or a room in a nursing home can quickly consume the savings an older adult may have set aside for their golden years. Medicaid can be of the utmost importance for those in need of extensive support later in life. Medicaid can cover costs that Medicare does not.
Unlike Medicare, Medicaid benefits may require repayment eventually. For those who do not engage in advance planning, the use Medicaid benefits later in life could lead to an insolvent estate.
What is an insolvent state?
The property that belongs directly to an individual becomes their estate when they die. Any debts that they still owe at the time of their passing become the responsibility of the estate. An insolvent estate has more debts than resources.
The personal representative must take great care to ensure that they pay the debts in the proper order of priority. They could have personal liability if they improperly manage estate resources and make distributions to beneficiaries while creditors go without payment. The Medicaid estate recovery program can be a source of major estate claims.
Medicaid can demand full repayment
Qualifying for Medicaid requires careful planning. The state looks at an individual’s countable assets and income when determining whether they are eligible for Medicaid benefits.
It is possible for people to qualify for Medicaid while possessing valuable property. Typically, the primary residence of a Medicaid applicant does not prevent them from securing coverage. However, their home and any other assets in their name when they die are vulnerable to estate recovery efforts.
The personal representative of the estate may need to sell off or liquidate any assets remaining in the estate to repay creditors, including Medicaid. Beneficiaries may not end up inheriting anything in scenarios where estates become insolvent due to the decedent relying on Medicaid for long-term care.
Proper planning to qualify for Medicaid and protect resources from estate recovery efforts is of the utmost importance for older adults thinking about their comfort as they age. Those who understand the rules of the Medicaid program can make plans that protect themselves and allow them to establish a meaningful legacy.
