Some states, including Virginia, that are facing a budget shortfall are attempting to retrieve money from the estates of people who used Medicaid to pay for long-term care. Medicaid is an entitlement program financed by the state and federal governments. The Department of Medical Assistance Services administers the Virginia Medicaid program.
Eligibility for Medicaid is based on a combination of financial and non-financial requirements. States set their own income and asset eligibility criteria for Medicaid and eligibility is primarily for people falling into particular categories, such as the poor and elderly. In 2011, 82,885 elderly persons participated in Virginia's Medicaid program, many as part of their estate planning.
Recovering long-term care costs from the estates of deceased Medicaid recipients is one way that cash-strapped states are looking to reduce the total cost of Medicaid for the state. Other proposals include eliminating or making cuts to certain programs.
Elderly people planning to enroll in Medicaid programs can plan ahead so that their long-term care is covered and their children aren't left with unexpected and expensive bills. Some options they may consider are transferring certain assets to their children or creating a trust prior to enrolling in Medicaid. Another option could be obtaining long-term care insurance that could cover long-term care before Medicaid coverage begins.
Unfortunately, people are often surprised with unexpected bills or financial obligations when their loved ones pass away. That is why it is essential to plan ahead for the unexpected. An attorney experienced in estate and long-term care planning can help families determine the best plan to protect their assets in the future.
Source: The Wall Street Journal, "Medicaid Gets Harder to Tap," Kelly Grene, March 30, 2012