People who have never relied on state benefits may find them necessary in their golden years. Even professionals who have long prided themselves on meeting all of their own needs may eventually need professional caregiver support or even a room in a nursing home.
When that degree of support is necessary, then Medicaid benefits may become necessary as well. Older adults who need an in-home health aide or a room in a nursing home must qualify for Medicaid if they do not have the resources to pay out of pocket. Prior planning is critical to avoid the lookback penalties imposed on Medicaid applicants.
What are the lookback penalties?
When people apply for Medicaid for long-term care costs, the state looks at their current income and countable assets, as well as prior transactions. The review goes back five years from the application date.
Failing to plan in advance may result in any large gifts or transfers triggering a penalty. The state adds up the total amount of gifts or transfers and then converts that figure to a number of months of care. The state then requires that the older adult pay out of pocket for that many months before Medicaid begins covering their long-term care costs. Advance planning well before benefits are necessary is the best way to avoid Medicaid lookback penalties.
Working with an attorney to create a trust, shift asset ownership and ensure future compliance with Medicaid requirements can help people prepare for their golden years more effectively. A financial plan for covering nursing home costs can help older adults count on support when they need it and take the pressure off of their families when one’s situation evolves.
