Depending on your employment arrangements, you may have private insurance coverage even after you retire, although that is rare. Most older adults will depend primarily on Medicare for their basic health care expenses after retirement.
Medicare is an excellent program that helps defray the standard medical costs people have, but it falls far short of the needs of individuals with more serious medical concerns. Older adults that need in-home nursing support, extended rehabilitative care or nursing home residency will discover that Medicare will not cover those costs.
These older adults will either need to pay for some of their care costs with their own resources or find a way to qualify for Medicaid instead. Adding a trust to your estate plan can help you if you intentionally require Medicaid benefits in the future.
A trust will help you qualify
The most significant benefit of adding a trust to your estate is that you will have a much easier time qualifying for Medicaid when you need benefits. The government typically looks back over five years of financial records when someone applies for Medicaid and will penalize an applicant for transfers that took place during that time.
You may be subject to a requirement that you pay out of pocket for months before Medicaid will pay for anything if you don’t plan ahead to avoid a penalty and qualify quickly when necessary.
A trust will protect your assets for your loved ones
Even if you qualify for Medicaid, the government might still try to hold your estate accountable for the medical care you received. An estate recovery claim might force your family members to liquidate most or all of your personal property, including your home time to pay back the benefits you received in the last years of your life.
Those who add an asset protection trust, which some people call a Medicaid trust, to their estate plans, will have an easier time qualifying for benefits and less risk of the government laying claim to the legacy they wanted to pass to their children. Learning more about how trusts and advanced planning can help you as you age and protect your loved ones when you die will lead to the creation of a more effective estate plan.