Many people rely on Medicaid or other government assistance programs to provide them with care in their golden years. To qualify for these programs, individuals must meet certain income and asset requirements.
Through Medicaid planning, you can plan for your future care while preserving your assets for your beneficiaries. Long-term care planning is an essential element of an estate plan, but it is not without potential pitfalls.
When planning for Medicaid or other medical assistance, take extra care to avoid the following seven mistakes:
- Give away assets too soon. Early transfers can cause Medicaid, tax and financial issues. Make sure you take care of your needs first and avoid putting your security at risk.
- Apply for Medicaid too early. If you apply before your assets have been properly distributed, sold or spent down, it can result in a longer period of ineligibility.
- Apply for Medicaid too late. Applying too late can mean months of unpaid care. From the date of application, you typically can only claim up to three months in back coverage.
- Not use Congress-approved transfers. Certain transfers will not affect Medicaid eligibility. This includes transfers to disabled children, caretaker children and into trusts for disabled individuals under 65.
- Not plan for the healthy spouse to die first. People often name their spouse as primary beneficiary of exempt assets, such as residential property. If a healthy spouse dies first, the nursing home resident inherits these assets, which then can be used to finance nursing home care.
- Think it is too late for Medicaid planning. There are ways to protect an individual’s assets, even if they have already moved into a nursing home. Find out what options are available for your situation.
- Fail to get help. Long-term care planning is complex, often with thousands of dollars at stake. It is in your best interests to consult with an estate planning lawyer as well as other experts in the field.
