Individuals preparing for retirement often take for granted the idea that they have of medical coverage available. Those at or past the age of retirement frequently qualify for Medicare coverage. Even those who didn’t work full-time can qualify for Medicare based on the employment history of a spouse in many cases.
Medicare is a crucial form of financial support for older adults who no longer have access to employer-sponsored health insurance. However, many older adults eventually require support that Medicare may not cover. In-home nursing support, long-term rehabilitation care and nursing home costs are typically not eligible for Medicare coverage.
Older adults may need to apply for Medicaid when they have extensive care costs. People frequently assume that by the time they need Medicaid, they can qualify quickly. Unfortunately, the standards for Medicaid are relatively strict. Older adults sometimes find themselves facing penalties when they apply for Medicaid. Those penalties can prove problematic for those in need of support as they age.
What does the Medicaid penalty entail?
Those seeking Medicaid coverage for long-term care costs are subject to a lengthy financial review. The state looks at 60 months of prior financial conduct. Any significant gifts or asset transfers in those five years before the older adult applies can lead to a penalty.
The state first quantifies the overall value of inappropriate transfers. They then convert that figure to a number of months of care costs based on current average expenses for such care. The Medicaid penalty forces an older adult with limited resources to pay for their own care for a specific number of months based on their previous financial activity.
Medicaid won’t cover an older adult’s care costs despite the fact that they may have already transferred those assets and cannot access them to pay for their care themselves. Older adults and those preparing for retirement frequently benefit from advance planning for Medicaid. By making certain financial moves five years or more before applying, applicants can increase their chances of approval without a penalty.
Typically, Medicaid planning strategies may involve transferring ownership, making gifts to loved ones and even funding a trust. Understanding what is at risk without a Medicaid plan can help older adults see the value in preparing for the possibility of needing Medicaid coverage in the future.
