Medicaid planning: Are you ready to face healthcare costs in old age?

The steady rise in healthcare costs has become the greatest financial challenge facing older Americans. According to the Health Care Cost Institute, in the last ten years, the cost of healthcare has grown at a rate more than triple that of the rise in average salaries. This means that the average retiree who stops working at age 55 will pay $372,400 out of pocket for healthcare expenses by the age of 85.

It can be heartbreaking to work your whole life to build a nest egg only to see it whittled away by the healthcare industrial complex. You may have other plans for the assets you've earned, like leaving them to loved ones or funding a charitable legacy after you're gone. Well, just because healthcare costs are growing at an out of control pace does not necessarily mean you'll be stuck having to sign over your estate to the local hospital. Through Medicaid planning, you may be able to develop a plan for the future that can keep healthcare costs from ravaging your family's finances.

Income and assets must fall below a certain amount to be eligible for Medicaid

Medicaid is a government program designed to provide needed healthcare for Americans who have little income and few assets. There are eligibility requirements that a patient must meet before qualifying for Medicaid benefits. Medicaid planning is the process of laying out a framework of legal estate planning documents that will ensure financial eligibility for Medicaid.

Income eligibility is one important facet of receiving Medicaid benefits. Those who have a regular income that exceeds a certain amount set by law will not qualify for Medicaid. Surpassing the income thresholds can be an issue for seniors who have a pension or otherwise have a source of periodic income. Often, income in excess of the Medicaid eligibility limits can be diverted to a special trust known as a Miller trust in order to ensure the availability of Medicaid benefits.

Not only do Medicaid recipients have to fall below the income threshold, they also generally cannot own assets valued above a certain amount (currently $2,000 for Texas individuals entering a nursing home). But, there are many complex exceptions to the asset cap, including a large exception for a home owned by the Medicaid recipient. An estate planning attorney can help those who may run afoul of the asset cap dispose of excess property in a way that accords with their wishes and minimizes tax liability.

Get in touch with a Texas elder law attorney to explore Medicaid planning

For seniors who experience a medical emergency, Medicaid planning can still be of benefit. That being said, it is far better to begin the Medicaid planning process long before a serious medical condition has started causing problems. Not only will seniors who start Medicaid planning earlier have a broader array of legal options, they will be more likely to be able to make important decisions on their own, free from the pressures and difficult choices brought on by an emergency medical situation.

If you think Medicaid planning might be right for you, or perhaps you have an older relative who may soon be in need of affordable healthcare, talk to an elder law attorney today to find out if seeking Medicaid eligibility is the right option.