Medicaid and Appropriate Planning

Medicaid is a joint "Federal-State" health care program that was originally designed to help those with very little financial resources get medical help. However, over the past couple of decades, Medicaid has increasingly taken on the role of being middle-class America's Long-Term Care insurance provider. Today, Medicaid pays 50% of all long-term care costs.

The reasons for this are several, but in general, it is the result of our society's lack of attention to the fact that we are creating a new segment of our population - one that has not existed much in the past: That being the "Senior Citizen."

Yes, there have always been elderly folks living among us but today, those who are age 65 and above represent the fastest growing demographic in our population. And, because this new segment of our population is of such recent origin, our society has not adequately prepared for dealing with many of the complications that come along with this newfound longevity of life.

As such, Medicaid has found itself in the situation of playing "pinch hitter" as far as long-term care is concerned. Medicaid will pay for long-term care if the person requesting help is eligible to receive benefits.

This is actually how Medicaid Planning came about. People found themselves in the predicament of needing long-term care help but did not have the financial resources available to them. So, they turned to Medicaid who then put the person through the screening process to determine eligibility.

What people found was, in order to be eligible, they had to essentially have nothing. Many of these folks had worked hard all of their lives and had managed to save a few dollars but now, found themselves in the position of having to spend much of their hard-earned savings first in order to become eligible for Medicaid.

Medicaid Planning then, is a way to legally "divest" yourself of your financial assets in order to become eligible for Medicaid. The goal here is twofold: First, you want to preserve as much of your estate as possible; and, second, you want to become eligible for Medicaid.