Given that Medicaid and Medicare offer similar but not overlapping health care insurance benefits and that they have similar names, many people wind up confused about the differences between these two valuable programs. They are, however, completely different programs that affect your finances and estate differently.

One of the unique features that set Medicaid apart from Medicare is the fact that, because it is a needs-based program, the government can treat Medicaid benefits like a loan. If someone does not have the resources to cover the cost of their own care, Medicaid benefits can provide for them during their final years.

After they die, Medicaid could then bring a claim against the estate of the deceased, possibly seeking the repayment of tens or hundreds of thousands of dollars worth of benefits. In some cases, those who haven’t planned carefully to qualify for Medicaid and protect their assets could wind up leaving nothing behind for the people that they love.

Medicaid can even take your family home

Most people who apply for Medicaid either have already depleted all of their personal assets to the point where they no longer have disposable resources to spend on medical costs or they have engaged in careful asset protection planning that reduces their potential liability through the gifting or transfer of assets.

People often assume that their home has certain protections from seizure to repay debts. It is true that you can exempt some of your home equity even in a Chapter 7 bankruptcy, and it is also true that the government would not evict you from your home while you receive Medicaid benefits.

Still, the government can and does seize real estate from someone’s estate if they received Medicaid benefits prior to their desk. Careful transfer of title or moving the property into a trust may be a way to protect the home from vulnerability if you need Medicaid benefits later. 

Asset planning will help ensure you have something to leave behind

You have worked your whole life to support yourself, raise a family and create a legacy. You shouldn’t have to worry about leaving your loved ones nothing but work and debt when you die.

Asset protection or Medicaid planning can go a long way toward the protection of your legacy and ensuring that the people who love you don’t just have heartache but also an inheritance after your passing.