Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 1

There are many different facets to consider when you are engaged in your estate

planning efforts. Transferring assets is not always as simple as an exercise in pie slicing.

You should carefully consider the impact that a direct inheritance can have on

each of your loved ones. If you act in a discerning manner, you can provide for each person that you love in the optimal fashion.

With this in mind, we will look at the value of special needs trusts in this paper.

MEDICAID COVERAGE

You have probably heard of the Medicaid program. This is a health insurance

“The Medicaid program will pay for long-term care, but it is a need-based program. To stay within the asset limits,

people typically give assets to their loved ones before they apply for coverage.”

CAN I GIVE AWAY ASSETS TO QUALIFY

FOR MEDICAID IN INDIANA?

PAUL A. KRAFT Indiana Estate Planning Attorney

Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 2

You may be unconcerned about future long-term care costs for two reasons. For one, you may assume that you will never need help with your activities of daily living. You may also get the impression that Medicare will pay for living

assistance if you ever need it.

Both of these assumptions are false. First off, the United States Department of Health and Human Services tells us that no less than 70 percent of people reaching the age of 65 will eventually need long-term care. The future need for

living assistance is a likelihood, not a remote possibility.

Now, let's look at the limitations of Medicare.

Most seniors will qualify for Medicare when they reach the age of 65. You gain eligibility by earning retirement credits. You can earn up to four credits per year when you are working and paying taxes. Once you have at least 40 credits, you

will qualify for Medicare once you reach the age of eligibility.

Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 3

Medicare coverage will certainly help, but this program will not pay for long-term care. It will pay for up to 100 days of convalescent care, but it will not pay for

custodial care at all.

Most people cannot pay for long-term care comfortably out-of-pocket. We practice law in the state of Indiana. In our state, the median cost for a year in a private room in a nursing home exceeds $85,000.

A government study that was conducted a couple of years ago found that the

average length of stay was over two years, and 10 percent of nursing home residents stay in the facilities for at least five years.

When you put all these facts together, you see a rather compelling picture: Most people will need long-term care, it is very expensive, and Medicare won't pay for

it.

Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 4

MEDICAID AND LONG-TERM CARE

You have probably heard of the Medicaid program. This is a health insurance

program for people who have virtually no financial resources. Medicaid will pay for long-term care.

Many people who were never poor seek Medicaid eligibility late in their lives. Because it is a program that is intended for financially needy individuals, there

are asset and income limits. As a result, seniors who are angling toward Medicaid eligibility must divest themselves of assets if they want to qualify.

Can you just give assets to your family members if you find

out that you need long-term care? The answer is yes and

no. You can give away assets after

you find out that you need long-term care, but if you do,

you won't be able to qualify for Medicaid right away. There is a

five-year look-back period. If the program evaluators find that you have given away

assets within five years of submitting your application, your eligibility will be delayed.

To explain by way of example, if you gave away enough to pay for two years of nursing home care, your eligibility would be delayed by two years.

Because of this five-year look-back, if you want to qualify for Medicaid at the

ideal time, you must complete your divestitures at least five years before you submit your application. Otherwise, long-term care costs will consume some or all of the inheritances that you intended to leave behind to your children.

Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 5

MEDICAID PLANNING STRATEGIES

Elder law attorneys assist clients who are concerned about long-term care costs. If you discuss your

unique personal situation with an elder law attorney, you can

devise a strategy that leads to Medicaid

eligibility. Your assets will

remain in the family, and you will get the

care that you need if you do in fact need long-term care at

some point in the future.

Can I Give Away Assets to Qualify for Medicaid in Indiana? www.FrankKraft.com 6

SUMMARY

Medicare does not pay for long-term care, and most seniors will someday need help with their activities of daily living. This care is very expensive, so the gap is

considerable. The Medicaid program will pay for long-term care, but it is a need-based

program. To stay within the asset limits, people typically give assets to their loved ones before they apply for coverage.

However, this is tricky, because you are penalized and your eligibility is delayed if you give away assets within five years of applying for Medicaid.

Legal advice is invaluable if you want to qualify for Medicaid without losing a

great deal in the process. Schedule a consultation with a licensed elder law attorney if you would like to obtain in-depth information about Medicaid planning.

REFERENCES

Genworth Financial https://www.genworth.com/corporate/about-genworth/industry-expertise/cost-

of-care.html

LongTermCare.gov http://longtermcare.gov/

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About the Author Paul A. Kraft

Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.

Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and

state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.

In addition to his practice, Mr. Kraft has lectured extensively in the areas of living trust planning, Medicaid planning, and

presenting public and private seminars on the importance of proper estate planning. He has also authored various articles on estate planning and is a contributing author of LEGACY:

Plan, Protect, and Preserve Your Estate–Practical Answers from America’s Foremost Estate Planning Attorneys.

Mr. Kraft is a co-founder of the Indiana Network of Estate

Planning Professionals, a charter member of the American Academy of Estate Planning

Attorneys and a founding member of the National Network of Estate Planning Attorneys. He is also a member of the Indianapolis Bar Association, including the Taxation, Business Law and Estate Planning sections; the Indiana State Bar Association, including the section on Taxation

Law; the Indiana CPA Society; and the Estate Planning Council of Indianapolis. Mr. Kraft is admitted to practice law before the Supreme Court of Indiana, U.S. District Courts, and U.S. Tax Court.

Frank & Kraft

A Professional Corporation Attorneys at Law www.FrankKraft.com

135 N. Pennsylvania Street Suite 1100

Indianapolis, IN46204-2485 Phone: (317) 684-1100

Fax: (317) 684-6111