Aaron Futterman, CPA, ESQ. of Futterman, Lanza & Pasculli, LLP (New York), discusses qualified retirement accounts and when one must start taking from the account before it begins getting taxed during a virtual seminar, “Be Secure in an Insecure Time” on October 14, 2020….(read more)

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What are Qualified Retirement Accounts and How Can They Affect Medicaid Eligibility?

Qualified retirement accounts are a type of savings account specifically designed to help individuals save for retirement. These accounts come with tax benefits and are often offered by employers as part of their benefits package. Common types of qualified retirement accounts include 401(k), 403(b), and traditional IRAs.

Many people rely on Medicaid to help them cover the costs of their healthcare needs as they grow older. However, the eligibility requirements for Medicaid are strict, and having too much in qualified retirement accounts can affect an individual’s ability to qualify.

In order to understand how qualified retirement accounts can affect Medicaid eligibility, it’s important to first understand how Medicaid eligibility is determined. Medicaid is a joint federal and state program that provides health coverage to individuals with low income and limited resources. Each state has its own eligibility requirements, but there are some general rules that apply across the board.

When determining Medicaid eligibility, the state looks at an individual’s income, assets, and resources. If an individual’s income and assets exceed the limits set by the state, they may not qualify for Medicaid. Qualified retirement accounts are considered a countable asset when determining Medicaid eligibility. This means that the value of the retirement account is included in the individual’s overall assets and can affect their eligibility for Medicaid.

There are, however, some exceptions and strategies that can help individuals protect their retirement savings while still qualifying for Medicaid. For example, if an individual has a spouse who is not applying for Medicaid, the state may not count the assets of the individual applying. Additionally, some states offer special Medicaid planning strategies that allow individuals to protect their retirement accounts while still qualifying for Medicaid.

It’s important for individuals to be aware of how their qualified retirement accounts can affect their Medicaid eligibility and to plan accordingly. Seeking the advice of a financial planner or elder law attorney can help individuals navigate the complexities of Medicaid eligibility and ensure that they are making the best decisions for their retirement savings and healthcare needs.

In conclusion, qualified retirement accounts are an important tool for individuals to save for their retirement. However, it’s important to be aware of how these accounts can affect Medicaid eligibility and to plan accordingly in order to protect one’s assets and still qualify for Medicaid when needed. Seeking professional advice can help individuals navigate these complexities and make informed decisions about their retirement savings and healthcare needs.