Aaron E. Futterman, CPA, ESQ. of Futterman, Lanza & Pasculli, LLP (New York), clarifies some confusion about qualified retirement accounts and explains how to make them not count against the applicant in applying for Medicaid during a virtual seminar “Help Protect Families at the Holiday Season” on November 9, 2021….(read more)

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When it comes to Medicaid eligibility, many people are confused about the role of qualified retirement accounts. These accounts can include IRAs, 401(k)s, and other types of retirement savings plans that are designed to help people save for their future. Many individuals wonder whether these accounts count against them when they apply for Medicaid, and whether having a retirement account could reduce their chances of being approved.

The answer to this question is somewhat complex, as it depends on a number of factors. In general, qualified retirement accounts are counted towards an individual’s assets when determining Medicaid eligibility. This means that if you have a large IRA or 401(k) with a significant amount of money in it, this could affect your ability to qualify for Medicaid.

However, there are some important exceptions to this rule. First and foremost, Medicaid counts only the money in your retirement account that you have immediate access to. If you have a traditional IRA, for example, you may be able to withdraw funds penalty-free once you reach the age of 59 and a half. However, if you withdraw funds before this age, you may be subject to a penalty.

This means that if you have a large retirement account, but you don’t plan to withdraw any funds from it soon, it may not count against you when you apply for Medicaid. Additionally, if you are drawing income from your retirement account in the form of regular payments, this income may count towards your Medicaid eligibility, but the underlying account itself may not.

There are some other important factors to consider as well. For example, if you have a spouse who is not applying for Medicaid, you may be able to transfer some of your retirement account assets to that spouse without affecting your eligibility. Additionally, certain types of retirement accounts, such as Roth IRAs, may be exempt from Medicaid asset calculations.

Ultimately, the best way to determine how your retirement accounts may affect your Medicaid eligibility is to speak with a qualified financial advisor or Medicaid specialist. These professionals can help you understand the rules and regulations that apply in your specific situation, and can help you make informed decisions about your savings and retirement planning.

In summary, while qualified retirement accounts can count against an individual’s assets when applying for Medicaid, there are many important exceptions and rules to consider. By working with a knowledgeable advisor, individuals can ensure that they are making the most of their retirement savings while still staying eligible for Medicaid and other benefits.