Planning for the future is always important, but it becomes even more crucial when facing a dementia diagnosis. Families often grapple with complex questions about long-term care costs and asset protection. Let us shed light on how Medicaid planning fits into this intricate puzzle.
How can the family protect your assets while still qualifying for Medicaid?
Medicaid is a program that both the federal and state governments run. It gives health coverage to eligible people, including those who need long-term care. You must show financial need in New Jersey to get Medicaid’s long-term care benefits. This means your assets and income must be below certain limits. People often use strategies to protect assets without losing Medicaid eligibility.
You probably think you must give away all your assets to get Medicaid. This is false. New Jersey law lists several exemptions that allow you to keep some assets. You can protect your primary home (with an equity limit), a vehicle, personal items, and a few countable resources. You must plan carefully with experienced professionals to understand these exemptions and know what you can legally protect.
Medicaid look-back period: How does it affect you?
The Medicaid look-back period is a crucial aspect of planning. In New Jersey, the look-back period for long-term care Medicaid is 60 months (five years) before your application. During this period, Medicaid examines your financial transactions for any transfers of assets for less than reasonable value. Some examples of a look-back violation include:
- Receiving an IRS gift tax exemption
- Missing some documentation for assets sold during the look-back period
- Paying someone, even a family member, to provide care for you
If the agency uncovers such transfers within the look-back period, it could result in a penalty, delaying your Medicaid eligibility.
How can professional guidance enhance your Medicaid planning?
Preparing for the financial complexities of dementia requires careful consideration and a comprehensive understanding of Medicaid rules and estate planning tools. A well-crafted plan ensures that you receive the care you need while minimizing burden on your family.