As a general rule, no one wants to rely on Medicaid benefits. Most people prefer to use private health insurance to cover their costs and the expenses of their loved ones. They may rely on Medicare after they retire and no longer have access to private insurance coverage. Medicaid coverage does come with a degree of stigma because it is a needs-based program. Only those with limited assets and income are eligible for Medicaid benefits.
While many people may want to use other forms of coverage, that isn’t always an option. Particularly as people age, they may find that they need support that Medicare doesn’t cover and that they cannot pay for out of pocket. Long-term care costs often force people to apply for Medicaid. Medicare does not cover those expenses, and people may not have enough retirement savings to pay for in-home nursing care or a room in a nursing home.
Those who might need Medicaid in the future usually need help planning for benefits as soon as possible to protect themselves and their loved ones. When is the proper time for those in need of Medicaid to plan to ensure their future eligibility?
Planning years in advance is ideal
When determining if individuals qualify for Medicaid coverage, professionals working for the state look carefully at financial records. They don’t just look at an older adult’s current income or their countable assets when they apply. It is also standard to scrutinize five years of financial records.
Any inappropriate transfers or gifts, including transfers to trusts, can lead to a penalty. In other words, the best time to plan for Medicaid is at least five years before an individual needs the benefits. For those thinking about elder care concerns, planning early in retirement or as soon as possible after a diagnosis can make all the difference.
What is the risk of not planning?
Failing to plan for Medicaid has two primary consequences. As mentioned above, applicants may be subject to a penalty. The state converts any questionable transfers or gifts made prior to the application into a number of months of benefits. The applicant is not eligible for Medicaid until after the penalty period ends.
The second risk is the possibility of estate recovery efforts after they die. The state may pursue repayment for all long-term care benefits received by older adults. In some cases, repayment efforts force the liquidation of any remaining assets in the individual’s name. Medicaid may even force the sale of their primary residence. While it does not prevent them from qualifying when they apply, their home could be vulnerable after they die.
Taking the time to plan for Medicaid eligibility in advance can make a major difference. Learning more about the program can help people connect with the benefits they need as they age.