03- Apr2017
Posted By: Tony Fischer

Medicaid Planning: What You Should Consider Before Starting

Planning for long-term care cost is a harsh reality for those planning for retirement.  As Americans live to be older, using of the long-term care system is inevitable. When seniors are forced to use the long-term care system is determined by variable such as health and the availability of family support.

The way many seniors and their families choose to plan for this unknown aspect of aging is through Medicaid Planning.  It is the process of using legal or financial tools to make themselves Medicaid eligible before they would have been otherwise.

Here are a few things you should consider before beginning the Medicaid Planning process.

Medicaid In A Nutshell

Medicaid is funded through the state with eligibility based solely on financial criteria.  It is different than Medicare which is automatically granted to US Citizens at the age of 65. A senior must apply for Medicaid and meet criteria before receiving coverage.

Medicaid has become the default payor for nursing home care. It covers the cost of nursing home care which is averages about $81,000 a year. That considered, it is easy to see why seniors are looking for ways to get Medicaid to pick up the nursing home bill.

Becoming Medicaid Eligible

Most seniors spend down their assets to the eligibility level, typically around $2,000 in assets, in order to qualify for Medicaid coverage.  Others use legal mechanisms like irrevocable trusts in order to protect their money from long-term care cost and preserve assets for the next generation.  This often involves transferring ownership of assets to a trust making them unavailable to the senior.  It is a strategy almost exclusively used by the rich but has recently been used by middle class seniors in order to become Medicaid eligible.

However it happens, for a senior to become eligible they must have less than $2000 in total assets. Check with your local department of human services in order to find out the exact state requirements.

The Look-Back Period

Any Medicaid Planning strategy usually involves navigating around the five-year look-back period. Each Medicaid application asks whether or not the applicant has transferred assets to someone else in the last five years.  If the answer is yes, the government will likely want the applicant to contribute a portion of the amount transferred to long-term care expenses before becoming eligible.

Assets transferred over five years ago will not counted as assets.

Avoid Giving Cash Gifts

Seniors often try to transfer assets to their family for friends through gifting.  Seniors will give the maximum amount allowable by the IRS, pay college tuition, buy cars, anything to control the distribution of assets.

A cash gift can be anything but if given within the look-back period.  The state can require that assets be returned and applied toward long-term care expense. They can even go after the person or organization who received the assets.

Considering gifting a portion of your assets to someone in your family? Make sure to consult your local Medicaid guidelines before making the gift.

Consult the Correct Expert

The population of those age 65 years of age and older is the fastest growing demographic in America.  As a result, everyone has a product designed the serve the senior population. There any number of professionals that offer Medicaid planning services but not all have the ability to actually do it. Even for those with a modest assets, Medicaid Planning involves complex legal and estate planning tools best accomplished by an Elder Law Attorney.

Going to an “expert” without the proper skills or authority to engage in Medicaid Planning could result in lost money and additional regulatory entanglements.

Stay In Control

If you can avoid it, it is always best to avoid government subsidies when paying for long-term care. Spending your own assets allows you to choose the care you receive and the place you receive it in. Using government subsidies restricts choice to the care funded by that subsidy.

Senior Care Plan

SeniorCareSherpa.com offers plans to help seniors and their families plan for long-term care. Senior care plan’s are elder-centered. The plan addresses the unique healthcare, financial and environmental needs of the senior. Whether it be brief or ongoing, we help seniors and their families navigate the senior care system.

Next Post: Four Reasons To Get A Senior Care Plan

Editor’s Note: The author, Tony Fischer, is not an attorney. The content in this post is intended to provide general information and not intended as legal advice. Contact an Elder Law Attorney before making any decisions on Medicaid Planning or any other Elder Law matters.

09- Nov2016
Posted By: Tony Fischer

Medicaid Planning: What You Need To Know

As Americans live to be older, they are outliving the assets set aside for long-term care and with the cost of long-term care skyrocketing, Medicaid has become the default payor source for those nursing home care in their later years.  Most people understand that Medicaid helps pay for the cost of nursing home care but there is still confusion on when someone becomes qualified to use the Medicaid benefit.  

If you are helping to care for a senior chances are you have considered applying for Medicaid benefits. It’s a great benefit but there are some things you need to know before applying.

Qualified Based On Assets Not Age

Unlike Medicare which is automatically given to every American once they turn 65, Medicaid criteria is based on the applicant’s assets and income.  Long-term care is expensive and in order for Medicaid to pick up the bill, they want you to use as much of your own money first before using tax dollars. Seems reasonable but Medicaid laws have not changed in sometime and as a result a senior has impoverished before even qualifying.

In general an applicant must have below $2000 in assets in order to qualify for Medicaid.

Also Read>>>What Does Medicaid Cover

It is important to note that each state controls how their Medicaid dollars are spent and as a result each state has their own set of Medicaid rules. For example, some states allow exemptions for houses and cars while other states require the senior sell those assets before applying.

The rules can vary so before applying contact your local department of health and human services or an Elder law attorney.

Look-Back Period

This is the time period in which Medicaid will look back into your finances to check for transfers of funds to family members.  In order to make themselves Medicaid eligible, many seniors and their families attempt transactions like gifting and quit claim deeds to preserve assets. If any of these transactions have been done in the last five years the Medicaid could assess a penalty that must be paid before Medicaid benefits begin.

There are great Medicaid planning strategies to preserve assets within the rules but most require the services of an Elder Law or Estate Planning Attorney to accomplish.

Medicaid rules for protecting assets change all of the time. DO NOT ATTEMPT TO PROTECT ASSETS ON YOUR OWN.  Unless you have an intimate and clear understanding of the rules, it could have disastrous consequences.

There Is No Going Back

Before applying for Medicaid make sure you do a throughal review of your finances.  Make sure you have taken advantage of all the exemptions allowed by Medicaid. Furthermore, make sure that all assets are being accounted for during the application process to avoid disruptions in coverage at a later date.  Remember once you apply, Medicaid can start looking back, if missed something you it may cause a penalty or cause a lapse in coverage. If your situation is complicated, it is important to have an expert look over your application before submitting it.

Make Medicaid Planning Part Of A Senior Care Plan

The decision to apply for Medicaid should be part of a long-term senior care plan.  Not all services are covered by Medicaid and not all providers can accept Medicaid payment. If becoming Medicaid eligible does not increase a senior’s access to services or fully cover the services they are using now, it might not be the right move.

Also Read>>>Avoid Overpaying For Long Term Care

Our Elder Care Coordinators can help develop a senior care plan designed to meet the unique health care needs of the senior. An important step to ensuring the senior is able to age in place.  After we help you develop a plan we can connect you with our community of Sherpa Certified providers to help you execute that plan.  Our list includes Elder Law Attorney’s, Home Care companies, Geriatric Care Managers and more.  They all have been vetted, checked and certified to be free of fraud and follow the industry best practices.  CLICK HERE for more information of starting you own senior care plan.