As you age, planning for the possibility of needing long-term care in Texas is an integral part of your financial strategy. In addition, Medicaid planning is critical in managing your estate and ensuring you will be eligible for government aid.
An irrevocable trust is an estate planning tool that transfers your properties out of your name and into the trust. So when the Centers for Medicaid and CHIP Services (CMS) reviews a person’s financial information to determine Medicaid eligibility, they won’t consider those assets.
Spend down your resources
This Medicaid planning strategy entails selling off or disbursing specific properties and liquidating accounts to reduce your net worth. However, you should note that CMS has a five-year lookback period, so gifting or transferring any assets within this time frame will result in disqualification from Medicaid.
Tax planning entails a comprehensive review of your financial situation and revenue streams to identify any opportunities for tax savings. This is important for those over the income threshold for Medicaid eligibility since converting money from taxable income into non-taxable income can help reduce your overall net worth, making you eligible for assistance.
Utilizing long-term care insurance
If you can afford it, having a long-term care policy in place can be invaluable when planning for retirement and Medicaid in Texas. These policies typically cover things like nursing home fees, assisted living costs, rehabilitation services and other medical expenses related to aging. Long-term care insurance also helps protect assets not covered by Medicaid, such as real estate and other assets, allowing you to pass them to heirs.
An annuity is when someone pays a lump sum of money to an insurance company in exchange for a stream of income over a certain period, typically a term shorter than your projected life span. It works because the CMS only considers the applicant’s income when determining eligibility.
With these Medicaid planning strategies, you can more confidently plan for your future and ensure you can get the care you need when necessary. In addition, developing a comprehensive plan can help set up your finances, preparing you for whatever life throws you down the road.