An Overview of Medicaid Planning in Tennessee

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When we are young, we often fail to think of what our needs might be when we turn old. But all of us age. Thinking about our care when we turn older is important. Consider:

  • Who is going to care for you?
  • How much money will you need to fund your long-term care?
  • When should you start planning for your elder care?

Long-term care planning is important, especially if one day you must go to a nursing home. Nursing home expenses are very high. Unless you have the financial resources to pay without worry, you may want to use Medicaid to help pay for any nursing home expenses.

Even though Medicaid is there to assist those without substantial means, the problem in Tennessee, Kentucky, and elsewhere is this: you have to qualify for Medicaid. If you have a certain amount in terms of assets, you cannot use the service but will have to finance your own long-term care. And, as discussed, that can be really expensive.

But there are ways to qualify for Medicaid even if you have a fair amount of assets. It requires preparation and forethought before you apply. You cannot procrastinate and take care of everything at a later date. Take a moment and familiarize yourself with Medicaid, how it works, and what the requirements are:

How does Medicaid work?

Medicaid can cover a person’s long-term care (in nursing homes primarily), but it is a means-tested program. That means to qualify, applicants must:

  1. have low income; and
  2. limited assets.

With this said, many people assume they will not qualify for it anyway, so why bother? But understand that you can qualify with some restructuring of your assets. To qualify for Medicaid in Tennessee, you must:

  • be a U.S. citizen;
  • a Tennessee resident;
  • 65 years or older, blind, or disabled; and
  • have a monthly income no higher than 300% of the Federal SSI Benefit level (currently at $2,313).

Income includes the sum of things like:

  • wages
  • Social Security benefits
  • pensions
  • SSI payments
  • veteran’s payments
  • annuities
  • IRAs.

Medicaid recognizes two types of assets: exempt and available. Exempt assets do not result in denial of benefits. Available or countable assets can disqualify you.

Tennessee exempt assets include:

  • $2,000 or less in cash
  • one primary residence (equity limit of $585,000) if you have an intention to return to the residence – note, if you sell the home, the profits count toward income
  • one automobile
  • an irrevocable burial trust
  • non-saleable property
  • household furnishing, furniture, clothing, jewelry, etc.

Anything that is not exempt generally means the asset is available to you and will likely disqualify you from Medicaid.

How can you protect your assets and qualify for Medicaid?

When you are older, retired, or otherwise in need of long-term care and don’t want to spend your savings on healthcare, you cannot just give your money away to your children to qualify for Medicaid. Doing so counts against you if it occurs within the Medicaid look-back period (5 years/60 months prior to applying for Medicaid) and could result in a monetary penalty. You must be strategic when applying, and that’s why there is estate planning available so you can do just that.

One of the best ways to protect your assets are through trusts. There are different trusts that can help you secure your assets, like:

  • asset protection trusts specifically designed to protect your wealth and to protect your wealth from long-term care; or
  • income trusts (either a qualified income trust or pooled income trust)

There are other ways, too – much of it is dependent on your individual circumstances. For example, if you are elderly and need care outside of what a nursing home can provide, you can have a caregiver agreement drafted. This agreement allows you to designate a family member or friend to care for you and receive an income while doing so. This benefits those who need the care but who want their savings to go to their loved ones.

The Key Takeaway

You can structure your assets in a way that – when the time comes – can qualify you for Medicaid. To be clear, this structuring is not about hiding assets but creating a thoughtful and comprehensive estate plan. Remember, once you establish a plan, you can always change it at a later date so you are not locked into something that you later have misgivings about. Contact an experienced estate planning attorney in Tennessee to get started on protecting your long-term care and your assets today.

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