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3 ways to protect your assets while dealing with Medicaid

In the later years of your life, health care can be a demanding and necessary expense. No matter how well you've saved for retirement, a long-term stay in a hospital or nursing home in late life can wipe away years of hard work if you haven't planned appropriately. Luckily, there are ways to leverage options such as Medicaid without leaving yourself or your spouse bereft. Here's an overview of some ways that you can qualify for Medicaid benefits to help with late-life health care without sacrificing everything else.

First, you can ensure that your spouse is supported by setting up annuities or other investments. Medicaid eligibility does involve looking at your income together, which means your spouse might have to shed assets to help you become eligible. By swapping some assets for annuities or other investments that pay out over time, you can reduce immediate income or asset value for your spouse without requiring that he or she give up a lifestyle to ensure you can get the care you need.

Second, you might consider working with certain types of trusts. Trusts that hold assets and distribute them over time can help you shelter those assets from Medicaid. Not every trust works in this manner, so it's important to work with an experienced lawyer to ensure the trust you invest in will serve you well in the future. Trusts also help you preserve assets so you can pass them on to loved ones in the future via your estate plans.

Finally, it's a good idea to understand what assets are countable under Medicaid and what assets are exempt. If you can swap countable assets for exempt ones, you can keep more value in your estate, even if you end up requiring Medicaid.

Source: 360 Degrees of Financial Literacy, "Medicaid Planning Basics," accessed March 24, 2017

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