I’m going to review some of the asset protection strategies that may be used to help qualify for either Medicaid and/or Veterans Benefits. First of all, it is important to explain that the “benefits” we are focused on are both Medicaid (which helps pay for nursing home care) and Veterans Aid and Attendance (which primarily helps qualified veterans pay for home care and assisted living).

Although the general rule is that all assets with cash value are “countable,” both Medicaid and Aid and Attendance applicants can prepay for certain services and can own certain assets that are considered “exempt.” So long as these prepayments and purchases are done according to the strict rules for both Medicaid and Aid and Attendance, these prepaid services and assets won’t be taken into account.

Prepay legal or other professional services: This strategy is one of the most beneficial for the client and the attorney.  What allows good Elder Law attorneys to do tremendous good for clients is the fact that prepaid legal services are considered an exempt asset.  Other professional services that can sometimes be prepaid include medical and dental services not covered by insurance, accounting services, and financial planning services.

Prepay taxes: Depending on the rules of the taxing authority, certain taxes can be paid in advance.  The most common are real property taxes, personal property taxes, and estimated income taxes

Pre-pay funeral arrangements: Certain prepaid funeral arrangements are exempt, if the arrangements are properly set up and properly funded, which typically involves use of an irrevocably-assigned life insurance policy and/or use of a special type of irrevocable trust.

Pay off outstanding debt: Both the VA and Medicaid do not look at outstanding debt, so if you want credit for the debt it must be paid off prior to applying for benefits

Purchase a new car: One vehicle, regardless of value, is an exempt asset for both programs. However, there are complex rules for how the vehicle must be titled, how the vehicle must be insured, and who can use the vehicle.

Purchase household goods or medical and personal items: Purchase of these items, if needed by the applicant, can render a relatively small amount of assets exempt.

Purchase caregiver services:   If your client is getting free home care services from a child or another adult family member, then a Caregiver Contract can be entered into between the parties whereby funds that would otherwise be countable can be passed to the caregiver as a purchase for value, and not as a penalized transfer.  This strategy unfortunately involves complex tax issues, and tax payments, for both the client and the caregiver, but is nevertheless very effective in certain situations, mainly in Veterans Benefits.

Remember the rules and regulations for both Medicaid and Veterans Benefits are very complex and a strategy used for one benefit may not be appropriate for the other benefit.  Always get proper legal advice before implementing any asset protection strategy from an Elder Law Attorney.

If we can be of service than please give us a call at 1-800-939-9093 or go to the web site www.TexasElderLawAttorney.com