Not everyone in New Jersey has, or can afford, long-term care insurance, which can be used for paying for nursing home care. Nevertheless, people should have a plan for how they will afford a stay in a nursing home, should they need it in their old age. This is when Medicaid planning becomes important.

Medicaid eligibility is based on a means test, which in general means that a person cannot have more than a certain, nominal, amount of assets and income to qualify for benefits. In addition, there is a five-year “lookback” period. This means that a person cannot give away their assets within five years of applying for benefits, in order to meet the means test. Any transfer of assets made within the five-year-lookback period may make it so that the applicant cannot be eligible for Medicaid for a certain number of years.

One way to preserve assets through Medicaid planning is to place assets in an irrevocable trust. This is because the funds in the trust are not controlled by the older person, they are controlled by a trustee. Single-premium income annuities are another way to protect assets for the support of one’s spouse.

In the end, it is best to consult with professionals when Medicaid planning. Having a plan in place to pay for nursing home care is important, but if it is not properly executed, it will not achieve the goals one has for it and could even result in the depletion of assets. Elder law attorneys can explain how the laws apply to their clients’ situations, so their clients can make informed decisions.