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Without a solid plan, Medicaid could take your entire estate

On Behalf of | Jan 5, 2021 | Estate Planning |

Government health insurance programs have strict limitations. Medicare is an important resource for adults over the age of retirement, but it doesn’t cover all kinds of care. People can wind up needing uncovered services or going into debt when they have Medicare.

Medicaid offers broader coverage for more intensive medical services, like residential care, but the program generally requires that an individual completely diminish their personal assets before receiving benefits.

As someone planning an estate or getting ready for retirement in Colorado, you may already know that Medicaid can’t take your home for you or force you to sell it if you need benefits. However, if you don’t carefully plan before you start receiving benefits, Medicaid could potentially take your house and most of the other property that you still hold in your name from your estate. 

Colorado Medicaid recovery program can go after your house

Each state has its own rules regarding the recovery of Medicaid funds when a recipient dies. Estate recovery efforts are common. Basically, the state that approves someone for Medicaid coverage will wait until they die to ask for repayment for any benefits received.

Colorado’s Medicaid program can bring a claim against your estate or heirs to seek repayment for all the benefits they ever paid out on your behalf. While the state won’t force your spouse or other dependent family members to leave the property after your death, they might force beneficiaries of your estate to sell the property if there isn’t a dependent living there.

In fact, the state can place a lien against the property while you are still alive, effectively preventing you from refinancing or transferring the property without repaying the benefits you’ve received.

Asset protection or Medicaid planning can protect your home and legacy

Asset protection planning is the specific estate planning practice of changing how you hold certain property to prevent creditors from making claims against that property when you die. The steps involved in this process are often similar to those involved in Medicaid planning for older adults.

Moving assets into a trust or making sure they can help you qualify for Medicaid when you need it can protect some of your property, such as your home, from claims by Medicaid or other creditors.