4 Common Medicaid Planning Mistakes
Most are aware that Medicare will cover a significant portion of their overall health-care costs as they grow older, but some are surprised that it is not free. It’s also not easy – managing the Medicaid application process is actually fairly complicated.
4 Common Medicaid Planning Mistakes:
- Procrastinating: Don’t wait too long to start planning ahead. Planning for Medicaid should be started long before benefits are actually needed to cover long term care costs. Individuals who wait too long often find that they have to exhaust a substantial portion of their assets in order to fulfill the program’s eligibility requirements by passing the means test. This last minute strategy can result in delayed or denied benefits.
- Gifting Assets: Medicaid utilizes a five-year “look back” period, checking for the sale or transfer of assets during the five years prior to application for benefits. If assets were transferred or “gifted” during the five years prior to applying, the applicant is required to wait for coverage. The amount of time they will be ineligible for coverage is calculated based on the value of the asset transfer/gift and the average cost of nursing home care. Early Medicaid planning can avoid this stressful situation.
- Creating the Wrong Type of Trust: Proper Medicaid planning means creating a trust and transferring assets, but all trusts are not the same. For instance, assets transferred into a revocable living trust are seen as available to provide for care costs and will be included in the calculations to determine benefits eligibility unless there is an applicable exemption. Trusts created for Medicaid planning purposes must be irrevocable. Assets in an irrevocable trust are not considered available. Special needs trust assets are also regarded as unavailable to the beneficiary and will not be taken into consideration for the means test that determines Medicaid eligibility.
- Failing to Consult an Attorney: Medicaid planning is a complicated endeavor. The rules are constantly changing. Well-meaning friends and family may offer planning advice that worked for them or someone they know, but there is no substitute for knowledgeable and qualified legal advice from an experienced Medicaid Planning attorney.
If you are concerned about preserving your legacy while also receiving the long-term nursing care you need, please get in touch with one of the experienced Medicaid planning attorneys at Elder Solutions Law Firm. We are prepared to help you strategically plan for your future.