What you need to know about Medicaid and asset preservation planning by Kurt R. Bachman

Question:  Is it cheating the government to do planning for and to become eligible to receive Medicaid, and to protect your assets?

Answer:  Absolutely not.  Medicaid and asset preservation planning is legitimate and very legal if done with the assistance of a professional and qualified elder law attorney. Two specific reasons for doing so are as follows:

1. If you have ever had a job you have paid into the system, i.e. you have paid into Medicare and Medicaid. Every paycheck that you have ever earned deducts money to pay for you to eventually receive Medicare and Medicaid.
2. Planning for and becoming eligible to receive Medicaid is very similar to preparing and filing a tax return. On the tax return, you are not required to take any deductions at all to lower your taxable income. In fact, the Internal Revenue Code taxes ALL of your income unless you chose to take deductions. In addition, the individual has the ability to choose whether or not they want to take a standard deduction or itemize.  Most people at least see if their itemized deductions will be more than their standard; and, if they are, they will itemize their deductions. No one ever questions whether or not this type of planning is cheating the government.  You are simply using the laws that are available to you so you don’t have to pay as much tax.  Likewise, Medicaid is very similar. Both the State and Federal governments have created laws that allow you to protect your assets. It is up to you to decide whether or not you want to use those laws to help protect your assets or whether or not you do not want to use the laws and spend your own money.