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Qualifying For Medicaid With a 401(k) or IRA

When planning for retirement, it is important to consider all of your financial assets, and to explore any impact those assets have on your eligibility to receive benefits, such as Medicaid. For many individuals, an employer-sponsored retirement plan – 401(k) or Individual Retirement Account (IRA) is the largest asset in their financial portfolio. Because these assets can affect Medicaid eligibility, it is important to conduct some advance financial planning. The experienced Medicaid planners at Stockton & Stern, LLC, have in-depth knowledge of how Medicaid is administered in Kansas, and they work with individuals and families to develop strategies designed to meet their objectives.

Medicaid or KanCare

Medicaid provides health insurance benefits to individuals of very low income. In Kansas, the Medicaid program is also called KanCare; KanCare is administered by the Kansas Department of Health and Environment. To qualify for Medicaid, the applicant must be either 65 years or older, disabled or have a household family member who is disabled, a parent or relative caretaker of a dependent child under the age of 19, blind, or pregnant. Applicants must meet Kansas annual income guidelines, which range from a maximum of $16,146 for an individual and $56,365 for a household of eight people.

What counts as an asset when applying for Medicaid?

To be eligible for Medicaid , applicants can only have a maximum of $2,000 per individual in assets. Liquid assets such as cash, investments, savings, stocks, bonds, and pension funds are all considered assets when applying for Medicaid. There are several assets that are exempt, including a house, car, household furnishings, personal belongings, and burial plots. When only one spouse of a married couple is applying for Medicaid, only the income of the person applying is considered in the application. As of 2018, the non-applicant spouse can retain half of the married couple’s joint assets, up to a maximum of $123,600. If you have an Individual Retirement Account (IRA) or 401(k), whether those assets are considered in your Medicaid eligibility depends upon whether your account is in “payout status”.

Individual Retirement Account (IRA) and 401(k)

When an individual reaches the age of 70 ½, they must begin taking minimum distributions from their Individual Retirement Accounts (IRAs). This means that the IRA is in “payout status”. Individuals may also put their IRA in payout status at the age of 59 ½ if they choose to take regular, periodic distributions of funds based on the life expectancy tables. When an IRA is in payout status, the payments that are received will count as income but the IRA will not count as an available asset in terms of eligibility for Medicaid. If your IRA is not in payout status, then it is counted as an asset and will affect your eligibility for Medicaid. Similarly, if a 401(k) is not in payout status, any funds you are eligible to withdraw will be counted as an asset.

Medicaid planning is important

Medicaid planning is an important step when planning for the future. But Medicaid is confusing and the application process is tedious. At Stockton & Stern, LLC , we understand and are here to help. Our experienced team has in-depth knowledge of the Kansas Medicaid program and we work with you from the beginning to structure a financial plan that enables you to meet your objectives and KanCare eligibility. Arrange for a consultation with a member of our team to discuss your concerns and your long-term goals; contact our office at 913-856-2828 or online.