Many times Florida residents with even moderate wealth will need to adjust their estate plan in order to qualify for Medicaid insurance. Medicaid is a total payment insurance system operated by the U.S. government and will accept claims from nursing homes for people who need constant medical care. Qualifying is usually accomplished by designing a spend-down strategy that diverts personal assets to the control of others who may inherit or hold the assets. Given how low Medicaid sets maximum asset level for means testing, qualifying generally means reducing all cash holdings to $2000 and diverting any other financial resources.
Paying down debt
Paying down debt may be the best option for many people. Medicaid qualification does not account for liabilities, and paying more on personal debt uses the money more effectively. This is also an option when estate planning for other purposes as well.
Establish an irrevocable trust
Setting up an irrevocable trust is an excellent option for some individuals needing Medicaid medical coverage. Trusts are also very often primary components of a comprehensive estate plan that will avoid probate entirely when properly designed.
Cancel or transfer ownership of life insurance
Life insurance is also considered an asset when Medicaid qualification is being determined. Sometimes a life insurance policy can be transferred to other ownership or be cancelled. The only insurance allowed is a term life policy not to exceed $1,500.
Purchase an annuity
Purchasing an annuity is also a good option for a married person who needs to reduce assets for Medicaid qualification. The financial instrument can then be put into the spouse’s name and would not count as a personal asset.
These are just a few steps some people can take when spending down to qualify for Medicaid. There are several significant rules to becoming eligible, and all will be used in the means test. Getting prepared is essential.