Age-related physical decline and medical challenges may prevent people from living independently throughout their golden years. Some older adults move into nursing homes. Others may be able to age in place in their own residences if they have home health aides to assist them with challenging daily tasks.
Medicare doesn’t cover long-term care costs, so elder adults often rely on Medicaid for those expenses. If older adults fail to plan in advance, the five-year lookback can trigger a penalty. How does that penalty work?
Transfers and gifts can delay benefit eligibility
Medicaid enforces strict standards regarding the countable assets and current income of people seeking long-term care benefits. The application process involves a financial review that evaluates five years of records.
People often make gifts or move money to trusts to meet the strict eligibility standards. In cases where those transfers or gifts occur in the five years leading up to a Medicaid application, the applicant may need to pay for their care temporarily.
The state calculates how many months of care the transfers or gifts could have paid for and then requires that the applicant cover their own costs for that many months before Medicaid coverage takes effect. It is often helpful to plan for potential future care needs long before medical issues arise.
Older adults who make transfers and fund trusts years before Medicaid becomes a concern can obtain benefits quickly and avoid penalties imposed due to last-minute planning. Working with an elder law attorney to craft a Medicaid plan can help older adults to better ensure their financial stability later in life. Timely planning makes care accessible when people need support the most.