As you near retirement, you must start planning for any health issues you may face down the road. Since long-term care costs are significant, you will want to avoid paying large sums out of pocket. Yet, because of your income and assets, you might fear that you will not qualify for Institutional Medicaid – which covers long-term care. But with proper planning, you will be able to protect yourself during your golden years.

Understanding Medicaid eligibility

To qualify for Institutional Medicaid, your income and assets must fall below a certain threshold. In Delaware, you can only receive coverage if your monthly income does not exceed $1,957.50 and your total assets do not exceed $2,000. If you are married, these figures rise to a monthly income of $2,937.50 and combined assets of $3,000. The value of your home is exempt from your total assets, so long as it does not exceed $595,000. Your vehicles, clothes, furniture and household goods qualify as exempt, too.

If you are married, you can preserve additional property if only you or your spouse – rather than both of you – end up needing long-term care. Whichever of you needs services can only have up to $2,000 in assets. Yet, whichever of you does not need services can have up to $128,640 in assets and an income higher than Institutional Medicaid’s limit.

Planning ahead

If you have significant assets, you may worry that you will need to spend them down to qualify for Institutional Medicaid. Yet, you can create an irrevocable Medicaid trust to safeguard them instead. By placing your property in the trust, you no longer own it. Since the trust owns these assets instead, the government does not count them toward your Medicaid eligibility. Yet, if you place your home in your trust, you can still live in it. And if certain assets in your trust earn income, you can collect it, so long as they do not push your personal income beyond Medicaid’s limits. Keep in mind that you must create your trust at least five years before you enter long-term care.

If you need long-term care in the future, planning ahead allows you to protect your assets. An attorney with elder law experience can help you understand your options for safeguarding them.