Medicare and Medicaid are two federal programs that help older Americans pay for their medical care, and their names are so similar that many people confuse the two. However, they are different in some important ways.
In this blog post, we will discuss some key points about applying for Medicaid in Minnesota. But first, we will provide an introduction to the idea of Medicaid planning.
In terms of elder care and estate planning, a key difference between the programs is that Medicaid can help pay for long-term care, such as nursing homes. Many Minnesotans will need long-term care as they get older, and they will, unfortunately, find that it is highly expensive. Medicare typically does not pay for this type of care.
In addition to differences in what they cover, the two programs have different eligibility requirements. Medicaid is intended for low-income, low-asset people, and so it has a means test for eligibility. If you have over a certain amount in the bank, you will not be eligible for Medicaid. That means you will have to pay for your long-term care on your own, and the costs can eat up your estate, meaning you will have less to pass on to your loved ones.
For these reasons, many people use trusts and other estate planning tools to maintain their eligibility for Medicaid when they need it.
Minnesota's Medicaid program is also known as Medical Assistance. It provides health benefits to over 1 million people, only about 17% of whom are seniors or people with disabilities.
To be eligible for Minnesota Medical Assistance, you must be:
- A Minnesota resident
- A U.S. citizen, permanent resident or legal alien
- In need of medical assistance
You must also be one or more of the following:
- Pregnant or responsible for a minor child
- Disabled, or have someone in your family who is disabled
- Age 65 or older
Even if you meet all the criteria above, you must still meet the means test. Because Medicaid is primarily intended for low-income people, the income limits are strict. For example, if you have a household of two people, the maximum income you can have and still be eligible for Medicaid in Minnesota is $24,353.
Estate planning and Medicaid
With careful planning, a trust can offer a way to maintain eligibility for Medicaid.
If you place assets in trust, they no longer belong to you; they belong to the trust. You can name yourself as beneficiary so that you receive periodic payments from the trust, but be sure that the payments fall short of the maximum level for Medicaid eligibility.
You can also name your loved ones as your successor beneficiaries, so that they can receive income from the trust after you are gone.
In this way, Medicaid can help pay for your long-term care, while your trust goes on providing for the people you care about most.
This type of trust is complicated, but experienced estate planning and elder law attorneys help clients and their families find plans that work for them.