Qualifying and applying for Medicaid is a complex and long procedure on its own. The threshold and other rules are often difficult to understand without a professional. As a result, people rely on second-hand information from other people, leading to a lot of misleading and outdated information being passed on.
On top of that, when estate planning in Long Island is added in the mix, things become even more confusing. This creates several myths about Medicaid planning, which can deter people from approaching the subject of setting up a Medicaid Trust in Long Island.
Here we bust some of the most common misconceptions about Medicaid planning.
Myth Number 1
You have to lose all your assets to apply.
This myth is a result of wrong information shared about the eligibility cap. People assume that they have to rid themselves of all their assets and pass them on to be eligible. This is completely untrue as there are some assets that you can still own and apply for Medicaid planning.
A certain amount of cash, one vehicle, one home (if you’re planning to live there or passing it to a spouse or child younger than 21), funeral trust, personal effects, etc. are exempt assets in New York.
There are some value limitations involved. An estate planning lawyer in Long Island can help explain it all.
Myth Number 2
“If I make a transfer, I’ll be ineligible for Medicaid.”
Yes, setting up a Medicaid trust in Long Island means you have to consider a lookback period, which is 5 years in New York. When you apply for aid, Medicaid will look for transactions made within that time preceding your application.
If you have moved assets out or in of your Medicaid trust, it leads to the imposition of a divestment penalty. It can prevent you from getting Medicaid for a certain period. However, in New York, the penalty applies to Medicaid received to cover nursing home costs.
Since the regulations regarding the lookback rule do change, it’s important you consult your estate planning lawyer In Long Island.
Myth Number 3
Spouse’s assets or property aren’t considered for Medicaid.
If you’re applying for Medicaid, assets under your and your spouse’s name will be counted. Similarly, if your spouse is the one applying for Medicaid, their financial eligibility will also include your assets.
Denial to provide information about your assets in the latter case can lead to the denial of Medicaid for your spouse. A Medicaid trust in Long Island for you and your spouse can be a solution but you need a lawyer’s expertise to fund it properly.
Myth Number 4
“Revocable trusts are not counted.”
Unfortunately, since revocable trusts can still earn taxable income, they are also considered as an available asset. Also, these trusts can be amended at any time during the trust maker’s life.
That’s why the Medicaid trust in Long Island you set is irrevocable. Once you sign the documents, the assets are considered as under the trust’s ownership and not yours. If you have a revocable trust as your estate plan, reconsider your options with an estate planning lawyer in Long Island.
Myth Number 5
“I have too much monthly income to qualify.”
The income limits to qualify for Medicaid vary from state to state. Further, the type of disability, size, and structure of family also impact financial eligibility. Your lawyer can help you determine whether it’s past the threshold or not. Regardless of the answer, they can help you figure out how to plan for a future application.
For at-home Medicaid, New York applicants are allowed to keep a certain portion of their monthly income. Furthermore, you can transfer some of the income to the pooled trust you set up with a Medicaid Asset Protection trust.
Myth Number 6
“I can’t revoke my irrevocable Medicaid trust in Long Island.”
In New York, irrevocable trusts are revocable under certain conditions. The rules around it are quite complex and apply to specific cases, an estate planning lawyer in Long Island will be able to shed some light on it in much more detail.
Myths are a common theme when complex subjects are concerned. Your Medicaid trust in Long Island is no exception. Hence, it’s imperative you educate yourself and then seek professional advice before believing hearsay.
