Unless you have been a Medicaid recipient before you may know very little about the program. Moreover you may assume that you will never need to know much about the program because you will never need Medicaid benefits. The reality, however, is that more and more older Americans are relying on Medicaid to pay the high cost of long-term care in America, meaning that there is a good chance you will need to qualify for Medicaid at some point down the road. If you do find yourself in need of Medicaid benefits you could find yourself with a dilemma because your assets may be too high. Understanding the Medicaid program and the eligibility requirements should help you see the benefit to including Medicaid planning in your overall estate plan.
With the average cost of a year in a long-term care facility in the United States topping $75,000 you may find that Medicaid is your only option for covering the cost. Most private health insurance plans do not cover long-term care costs nor does the Medicare program. Although Medicaid will cover the costs of long-term care you must first qualify for Medicaid benefits. To qualify you must fall below the program’s income and asset limits. Furthermore, the asset limit is low – often just $2,000. To get around the asset limits people often think they can just add a son/daughter’s name to the title of a home or transfer assets outright to a family member; however, this tactic won’t work because of Medicaid’s “look-back” period.
Medicaid uses a five year “look-back” period when reviewing applications. Any asset transfer made during the look-back period will likely be questioned by Medicaid. In most cases, Medicaid will treat the transfer as if it never occurred – essentially “re-crediting” the value of the asset to you. For this reason, last minute asset transfers, or adding someone’s name to an asset, will not work to meet Medicaid’s asset limit requirement.
Medicaid planning, however, will work. The earlier you begin with your Medicaid plan the better your chances for success and the more assets you will be able to protect. Talk to your estate planning attorney now about Medicaid planning to ensure that you qualify for benefits when the time comes without losing valuable assets in the process.