Before we get to the question that serves as the title of this post, we have to provide some background information for the uninitiated.
You may wonder why Medicaid is relevant to senior citizens when most elders will qualify for Medicare. It is true that both programs are government run health insurance programs, and they do cover many of the same things.
There is however a huge difference that will explain a lot. Medicare will not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living community. For some, in-home custodial care is also an option.
Medicaid will pay for this form of care.
According to statistics provided by the United States Department of Health and Human Services, the majority of senior citizens who are reaching the age of 65 will eventually need long-term care.
Simply put, the care is not affordable for most elders. We practice in the Albany area, and the average annual charge for a room in a nursing home here exceeds $135,000 per year.
The Medicaid Solution
Though Medicaid will cover long-term care costs, it can be difficult to qualify, because there are asset and income limits. The limit for countable assets is just $2000 for an individual in most states. Fortunately, some of your most valuable assets do not count, including your home up to $878,000 of equity in New York in 2019.
Look-Back Period
Now that we have set the stage, we can get to the point. When it comes to countable assets, you may wonder if you can simply give away resources to your loved ones when and if you need long-term care. You would essentially be giving them their inheritances in advance.
It is possible to divest yourself of assets in advance of applying for Medicaid coverage. However, you must be aware of the five-year look-back period.
The program does not want people to start divesting themselves of assets immediately after they find out that they need long-term care, because that would “playing the system” for want of a better phrase. This is why the 60 month look-back is in place.
If you apply for Medicaid, program officials will examine your financial transactions going back five years. You will be penalized and your eligibility will be delayed if they find that you have given away assets within five years of submitting your application.
The length of the penalty is determined by comparing the amount of the divestitures to the average cost of long-term care in our region of New York. For example, if the average they used was $130,000 per year, and you gave away $260,000 within five years of applying, your eligibility would be delayed by two years.
Medicaid Planning Special Report
In this post we have provided some basic information about the Medicaid look-back period. If you would like to obtain more comprehensive information about the Medicaid program, download our special report.
This report is being offered free of charge, and you can get your copy through this link: Medicaid Planning Report.
Attend a Free Seminar!
Our attorneys are holding a series of informative seminars over the coming weeks, and we really enjoy meeting our neighbors in this manner.
All too often, we are asked to do some damage control because the mistakes were made, and we do our best. However, it is disconcerting when you realize that the negative circumstances could have been avoided through the proper advance planning.
This is why we go the extra mile to reach out, and we urge you to attend the session that fits into your schedule. To see the dates and obtain detailed registration information, visit our seminar page and follow the simple instructions after you click on the session that works for you.
- Medicaid Planning - August 31, 2023
- 5 Essential Estate Plan Components - August 22, 2023
- How to Apply for Senior Medicaid in Vermont - December 11, 2022
