For many older adults, Medicare coverage provides sufficient financial protection from medical costs. They can rely on Medicare for basic medical needs throughout their retirement years.
However, Medicare has numerous restrictions on benefits, including limits on rehabilitative care and long-term care benefits. People who need nursing support in their homes or a bed in a nursing room may need to apply for Medicaid. Planning years in advance is the best strategy for those who may rely on Medicaid for long-term care costs.
The state looks at years of records
Professionals determining if a person is eligible for Medicaid coverage for long-term care do not just look at their current income and countable assets. The financial review process involves assessing five years of financial records.
Large gifts and transfers made in the years prior to a Medicaid application can trigger a penalty. The state determines how many months of care those funds could have purchased. The Medicaid applicant may then need to pay their own costs for that many months before Medicaid coverage starts.
The Medicaid penalty puts people at risk of an inability to pay for critical care when their health declines later in life. Planning in advance makes it easier for people to avoid the penalty. People who fund trusts, take on co-owners and make strategic asset transfers five years or more before they apply for Medicaid are in the best position possible to qualify for benefits and avoid financial penalties.
Medicaid planning protects people who are vulnerable as they age and can also help protect the legacy a person leaves after they die. Working with an elder law attorney can help older adults prepare for the possibility of long-term care costs accordingly.