Medicaid Planning and the Five-Year Lookback
As you age, planning for long-term care can feel scary and confusing. Keeping up with all the rules about what you can and can’t do with your money can also be confusing and hard to follow.
The best option to have any Medicaid questions answered is to contact an attorney. Learning some basics about Medicaid and your estate plan can calm your worries. It can help until you’re ready to start making a plan.
Knowing the Basics
When you start estate planning, long-term care planning will be a big part. There are three main ways to pay for long-term care: privately, where you pay for the cost of your long-term care out of pocket; long-term care insurance, which is an insurance policy to assist with the payment of your care; and Medicaid, which is a state program that pays for long term care when you have medical needs, but minimal assets.
What is Medicaid?
As you begin your estate planning, likely, you’ve already heard about Medicaid. Medicaid can have a bad reputation, but understanding it can really help when planning your estate.
The biggest benefit of Medicaid is that should you need long-term care, the costs of that care are covered in their entirety. If Medicaid is involved, you or your family won’t pay out of pocket for any part of your care. However, Medicaid also has some concerns that many people may see as sticking points.
To get Medicaid benefits, you need a medical evaluation and must meet income and resource requirements. Medicaid covers long-term care but only in skilled nursing facilities, not retirement communities. The evaluation looks at your spouse’s assets and any property you owned in the last five years. Understanding these requirements is important for planning ahead. Medicaid helps cover long-term care costs, especially for those with limited assets. To qualify, you must go through a detailed review of your medical needs and finances. This includes the “five-year lookback”.
The Five-Year Lookback
Before checking if you’re eligible for Medicaid, they will review all the assets you’ve had in the last five years. The “five-year lookback” stops people from giving away their things to qualify for Medicaid. It ensures they meet the income and resource rules.
What people may not realize is that this period also includes selling assets. For example, if you were to sell your home to a child for well under market value within the five years before applying for Medicaid, this may make you ineligible to apply. This can be extremely difficult, as many people simply don’t know when they’re going to need expensive long-term care, especially five years into the future.
Although navigating Medicaid can feel stressful and overwhelming, an experienced estate planning attorney will be able to help you determine the best path forward as you begin your estate plan. An attorney will know different techniques to help protect your assets and your family from the stress of dealing with Medicaid and can advise you on the best path forward.
If you have any questions about Medicaid and how it relates to your estate plan, contact us today! We would love to assist you.
Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.