01 Aug
Medicaid coverage sometimes carries a degree of stigma because it is a needs-based program. Most people don’t want to rely on Medicaid benefits if they can use private insurance or even Medicare. Many retired adults can cover their basic health care expenses using Medicare coverage.
However, even with supplemental plans, Medicare has significant coverage gaps. The program does not pay for nursing home care, in-home nursing support or other forms of long-term care. Older adults who can no longer live fully independently may need to apply for Medicaid benefits. When they apply, their finances are subject to a thorough review to determine if they are eligible.
Adults preparing for retirement often don’t consider the potential need for long-term care until they truly cannot live independently anymore. At that point, they are at risk of a Medicaid penalty. Planning in advance is critical for quick qualification when benefits are necessary and the avoidance of a costly penalty.
Years of records are subject to scrutiny
When people apply for Medicaid, professionals look at their current income and countable assets. There is also a review of major transactions that have occurred in the years leading up to the application. Current Medicaid policies require the review of five years’ worth of financial records.
Significant gifts or transfers made in those years can trigger a penalty. The best time to plan for Medicaid is long before an individual’s health begins declining. In fact, Medicaid planning can be beneficial for those preparing for retirement.
By developing a Medicaid plan, adjusting ownership of certain assets and possibly funding a trust long before Medicaid benefits become necessary, people can protect themselves from the risk of a frustrating and costly penalty. They can also protect their assets from creditor claims during their golden years or after they die.
Frequently, Medicaid planning involves a combination of tactics, such as using a trust to hold potentially vulnerable assets and adding co-owners to valuable property, such as real estate. People thinking about their long-term care needs and possible reliance on Medicaid as they age often require support.
Establishing an estate plan that includes a long-term care plan focused on Medicaid eligibility can help older adults. A Medicaid plan offers aging adults stability in their golden years and confidence about their ability to access critical forms of support when they’re vulnerable.