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How Your Stimulus Check Affects Medicaid Eligibility

economic stimulus check and cash in front of American flags

After the coronavirus pandemic hit America in March 2020, it prompted Congress to pass several bills meant to stabilize businesses and the economy. As part of those relief packages, the CARES Act provided many Americans with a stimulus check based on their incomes. For instance, those with an income under $75,000 per year received $1,200. People making over that amount received less on a sliding scale proportionate with their income. These payments were based on either an individual’s 2018 or 2019 taxes.  For those with a loved one in a nursing home or looking into long-term care, stimulus checks may have presented some worries about how they impact Medicaid eligibility. 

What is Medicaid and How Might a Stimulus Check Impact Eligibility?

First and foremost, Medicaid is a federal program that is administered by the state. Certain requirements need to be met in order to receive Medicaid. There are ways to handle exceeding the asset limits for Medicaid, including ensuring your property in the community is below the eligibility limit, reducing assets by paying off debt or by purchasing assets exempt under Medicaid, or transferring assets.

For Medicaid recipients in a nursing home, most of their income is supposed to go toward paying for the nursing home. However, because of how the stimulus check was devised, it doesn’t actually count as income. Therefore, it does not need to go toward paying for nursing home care for those on Medicaid and does not impact Medicaid eligibility.

As most states cap the amount of assets a single recipient can hold at $2,000 (the threshold is greater for married recipients), there were initial concerns that the stimulus check would put people over the limit for eligibility.

In general, it is important to plan for Medicaid eligibility, as there is a five-year look-back period for eligibility. Planning for Medicaid will give you options when the time comes. Part of this planning involves being eligible for Medicaid when the time comes and not being penalized during the five-year look-back period Medicaid uses when determining eligibility. 

There are also ways to deal with exceeding the asset limits for Medicaid. These involve paying down assets, ensuring your property is below the limit, reducing assets by paying off debt, transferring assets, and reducing assets by purchasing assets exempt under Medicaid. 

You may also be able to set-up trusts in order to protect your assets. As mentioned, this all has to be done in advance. For instance, an irrevocable trust can help you avoid having to give away or spend your assets to qualify for Medicaid. Essentially, it places your assets in a trust, making them no longer yours. A trustee must be named, and the assets can be passed on to your spouse or family after your death. You will not be able to make any changes to most types of irrevocable trusts once they are instituted. The Mattar Firm’s flagship trust is an irrevocable pure grantor trust which does allow control for the grantor. Call us today to discuss the best type of trust for your situation.

Should I Plan for Medicaid in Advance?

Medicaid planning in advance is critically important. Especially when you would like to keep your home or assets in the family. Advanced planning will allow you to avoid Medicaid’s five-year look-back and possibly avoid penalties involved with that. If possible, it is best to try to plan five years ahead of any illnesses or health trouble you or your spouse may encounter. This is easier said than done, but the earlier, the better.

Can an Attorney Help Me Plan for Medicaid?

A medicaid planning and asset protection attorney can help you set up a sound financial plan and meet the Medicaid requirements. Contact The Mattar Firm today for any questions about how to meet the Medicaid requirements. (844) 444-4444.

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