Even when people save aggressively for retirement, their resources may not be enough if they have unusual expenses. When older adults need long-term care later in life, the cost of their support could amount to thousands of dollars per month. Despite what people often expect, Medicare doesn’t actually cover long-term care costs in many cases.
Whether someone needs a room in a nursing home or skilled medical support in their home to age in place, they may need to apply for Medicaid benefits. Most people understand that Medicaid is a needs-based program. There are strict limits on both income levels and countable assets.
Does someone need to sell off all of their property to pay for medical care before they can qualify for Medicaid coverage?
Advance planning can protect resources
Provided that someone prepares ahead of time for the potential need for Medicaid coverage, they can potentially qualify quickly when the time comes. Planning years before someone requires benefits is usually the best option, as the state looks back over 60 months of financial activity before determining if someone is eligible for benefits. While New York has announced a reduced lookback period, it has yet to implement that policy.
If the state determines there were inappropriate gifts or transfers during that lookback period, then a penalty might apply. Someone may very well need to use their own resources to cover their care costs for a certain number of months before Medicaid covers them. People who change the ownership of their assets or move property into a trust can potentially qualify for Medicaid without becoming practically indigent in the process.
Certain resources do not count against someone’s eligibility for benefits or trigger a penalty. Regardless of how much their primary residence is worth, for example, that property should not count against them. Many other assets, including financial resources, may make planning necessary if someone hopes to qualify for benefits when the time comes. Those efforts at advance planning can also protect those assets and someone’s home from estate recovery attempts after the Medicaid beneficiary dies.
Those who understand why Medicaid planning is necessary can address the potential need for medical support later in life as part of their pre-retirement estate planning efforts. Addressing issues including long-term care during estate planning can help protect people from benefit ineligibility and financial hardships.
