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Do you have to be broke to qualify for Medicaid?

Medicaid helps pay for a large portion of long-term-care costs among the elderly population. However, it is a program rife with misconceptions. One is that you must be broke (or close to it) to qualify.

Good news: That is not true.

You can still protect all or most of your estate

With careful planning, the earlier the better, you can protect your assets and your kids' future inheritances. Earlier is better because of the five-year Medicaid lookback period. It states that any gifts or transfers of assets in the five years prior to your application could lead to penalties (with some exceptions). So, you have more options if you do estate planning well in advance of when you anticipate having to apply for a nursing home.

That said, you are not always completely out of luck if you recognize you need nursing home care fairly soon but have not done any estate planning. It may still be possible to preserve part of your estate.

Married couples have more leeway

If you are married, it is entirely feasible that the house, car and other assets can stay in your spouse's hands. In most instances, the government will not force the sale of a house to pay for your nursing home care when your spouse still needs to live in it. Early estate planning is still important, though, because if the both of you end up in nursing home care at some point, your house may need to be sold at that time or after your deaths with the proceeds going to Medicaid instead of to your family.

You can help people who need financial assistance now

One advantage of early estate planning is that, often, you can help people who have a genuine need for money now. For instance, if you plan to give $50,000 to your children after you die, you could start giving them parts of that every year, which would really come in handy for those who are saving for a car or house.

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