Medicaid planning in advance serves two key purposes. The first relates to how rapidly an applicant can acquire Medicaid benefits. The second relates to the protection of their assets after they die.
Ideally, people who may require Medicaid benefits for long-term care sit down to plan for those benefits years in advance. Doing so can protect them from challenging situations and protect the inheritance they hope to leave for their loved ones.
Medicaid looks back at years of records
Medicaid applicants are subject to strict limitations regarding their countable assets and their current income. The application process requires a review of five years of financial transactions. Home equity is one of the few high-value resources that may not affect an applicant’s eligibility for long-term care Medicaid benefits.
However, their equity may be at risk of estate recovery efforts after they die. Federal and state statutes require that the Medicaid program pursue reimbursement from the estate of an individual who received benefits after their death. While their home equity did not prevent them from qualifying when they needed benefits before, it could be at risk during recovery efforts.
Prior planning is critical to ensure that a person’s resources don’t interfere with their eligibility for Medicaid and that their assets aren’t vulnerable to recovery efforts after they die. Moving assets to a trust and taking on co-owners at least five years in advance is typically necessary to avoid penalties when applying for Medicaid and recovery complications after an individual dies.
Working with an elder law attorney can help people identify their vulnerable resources and strengthen their eligibility for benefits if they eventually need a room in a nursing home or other forms of intensive long-term care.
