Many people establish their estate plans based on the best-case scenario. They hope to age at home with the support of their loved ones. They aspire to limit their medical support requirements and to remain as independent as possible. While those may be admirable goals, they may not be particularly realistic.
Many older adults eventually become reliant on others for many aspects of their daily lives. They may need in-home nursing support or a bed in a nursing home. If older adults require intensive support, they may need to apply for Medicaid. Advanced planning is important for the protection of those in need of long-term care services.
Why do people need to plan for Medicaid?
Medicare is accessible to many older adults in a variety of circumstances. Unfortunately, Medicare does not cover long-term care costs. Older adults may need to qualify for Medicaid if they want support paying for nursing home assistance or in-home support. Medicaid can cover those expenses, but people have to demonstrate limited financial resources and income to qualify.
By the time people realize they require support from Medicaid, it is already too late to effectively plan. Medicaid has a five-year lookback period. Any significant gifts or transfers made in the 60 months leading up to a Medicaid application can trigger a penalty.
The Medicaid penalty forces an individual with limited resources and significant medical support needs to pay for their own care for a certain number of months. Advanced planning allows those preparing for retirement or the possibility of future medical decline to make transfers early enough to avoid lookback penalties.
People then enjoy the peace of mind that comes from knowing they can quickly qualify for benefits when they need support. They can also theoretically protect some of their most valuable resources from Medicaid estate recovery efforts that could diminish what their loved ones inherit from their estates after they die.
Prior planning for Medicaid is important for the financial security and peace of mind of aging individuals. Getting support from professionals familiar with elder law and long-term care challenges can help people better ensure their safety and comfort in their golden years.