6 common mistakes in Medicaid planning

On Behalf of | Oct 24, 2024 | Medicaid Planning |

Long-term care can be expensive, especially in a state like New York, where costs can be higher than in other states. That is why Medicaid planning is vital, especially for families whose only option for long-term care is Medicaid. Even well-to-do families can use Medicaid planning to protect their assets from getting depleted early.

Planning can help you extend the life of your assets and keep your long-term care going. Here are six common mistakes most people make regarding Medicaid:

Not planning at all

Most people wait until they need Medicaid and only start processing their Medicaid requirements once they need it. Do not put off planning for Medicaid use. Gathering all the required documents can take time, and you may encounter difficulties getting some of them. This could force you to spend out of pocket or even delay your treatments and long-term care needs.

Misunderstanding the look-back period

You can transfer some of your assets to family members to meet Medicaid’s asset limits. However, if you do so within the five-year look-back period, it can make you ineligible. Transfer your assets five years before you plan to start getting Medicaid.

Overlooking exempt assets

Medicaid’s asset restrictions do not apply to specific possessions, including your primary residence, personal items and car. You do not need to sell or transfer these assets to meet the limits. Missing these exceptions can result in unnecessary asset depletion.

Not making use of trusts

Trusts can be an essential part of your asset protection strategy. Using a Medicaid Asset Protection Trust can safeguard your wealth while ensuring you meet Medicaid eligibility requirements.

Forgetting your spouse in the equation

Medicaid rules protect the spouse who remains in the community, also known as the “community spouse.” These protections include allowances for income and assets to ensure the spouse has adequate support.

DIY Medicaid planning

Medicaid planning is complex and varies by state. You may think you are saving on costs by trying to do it alone, but you may just be making mistakes that could be costlier overall. Consider consulting a lawyer who can help you plan for your future. You may need to pay a bit more on consulting fees, but this can be cheaper eventually, as they can help maximize your assets and ensure you get the long-term care you need.