By now, it’s safe to assume that most people understand at least one thing about nursing home care: it’s anything but inexpensive! Depending on the type of care you’re looking for, your location in the state, and the amount of privacy you want during your stay in a care facility, it’s not uncommon for Florida residents to pay as much as $200 to $300 per day for long-term care. Obviously, most seniors won’t be able to sustain that level of expense for any serious length of time. As a result, Medicaid eligibility is a major planning concern for anyone who has reason to believe that nursing home care might be necessary at some point in the future.
Medicaid planning has grown in popularity as nursing home costs have risen, as more people are becoming aware of the need to effectively ensure that they’ll be eligible for Medicaid benefits when they eventually have to deal with nursing home costs. One of the most popular self-managed planning strategies involves the use of gifting to reduce a person’s overall wealth – and thus attempt to meet the program’s stringent income and asset eligibility standards. While gifting can be useful, however, it can also present unique problems. Before you attempt to use gifts as part of your Medicaid planning strategy, be sure that you understand the program’s look-back period.
What is the Look-Back Period?
The look-back period refers to a period encompassing the five years prior to your application for Medicaid benefits. Medicaid has been empowered by Congress to look back through your asset transfers over the course of that five-year period to see whether you’ve made any attempt to divest yourself of assets just to qualify for benefits. The system was designed with the goal of preventing people who could otherwise pay for their own care from being allowed to shelter and protect assets from scrutiny.
What Happens if Transfers End Up Being Counted?
Of course, if all Medicaid could do was look at those asset transfers, then the look-back period might not be of much concern. The problem is that when the program identifies such transfers within the five-year time frame, it can trigger penalties that prevent you from qualifying for program benefits for a set period of time. Ultimately, the size of any penalty is dependent upon the size of any disallowed transfers – which means that someone who transferred very large sums of wealth during that five-year period would probably end up being barred from Medicaid benefits for a longer period of time than someone who made relatively minor transfers of wealth.
This penalty can be extremely problematic, since the ineligible period only begins when you take up residency in the nursing home or long-term care facility. That means that you basically have to pay for your care for a period of time equal to the penalty timeframe before you can achieve eligibility for the Medicaid benefits you need. Given that your attempt to qualify for Medicaid would most likely be motivated by an inability to actually meet those costs for any sustained period of time, even a temporary denial can create tremendous hardship.
How Can You Avoid Negative Consequences?
Obviously, you should endeavor to avoid that penalty altogether. The problem you might face, however, is in determining the best strategy to accomplish that goal. Gifting is an important strategy for Medicaid planning, but it is something that must be done with extreme care – and constant awareness of the time restrictions Congress put into place. There are a number of things to keep in mind as you plan any transfers of assets.
- That five-year period consists of the five years immediately prior to your application for benefits. If you’re like most people, however, you may not have any real idea as to when you will actually need to apply. That can make it difficult to manage asset transfers.
- The best way to avoid that five-year look-back period’s complications is to begin planning early. Effective estate planning, sustained over time, can be one of the best ways to ensure that you’re prepared for Medicaid eligibility long before it becomes a real issue in your life.
- Long-term planning of that nature requires careful consideration of your ongoing financial needs, and ensuring that you title assets for maximum benefit while still maintaining the resources you require to fund your lifestyle.
- It is easy to make mistakes when you attempt these strategies on your own. Many people fail to properly understand how different assets need to be titled, how they should make gifts and other transfers of ownership, and how your Medicaid planning should comport with your broader estate planning needs.
Can an Attorney Help?
These are complex matters of law. As a result, it is typically unwise for untrained persons to attempt to navigate the Medicaid planning process on their own. Of course, if you have few assets and relatively modest income, chances are that you’ll qualify for the program on your own, with few problems, and no need for outside help. If your estate has various real estate holdings, pensions or life insurance policies, and other assets that might make it difficult to meet the program’s asset limitations, you really should consider seeking the advice and assistance of an experienced estate and Medicaid planning lawyer.
At Robert Kulas Attorneys at Law, our estate planning experts are ready to work with you to ensure that you fully understand how the Medicaid look-back period can impact your program eligibility in the future. We will help you develop a strategy that will avoid potential pitfalls in the years to come, and ensure that you are able to utilize gifting and other options in a way that meets the legal requirements for obtaining the benefits you need when you need them. Contact us online today or call us at (772) 398-0720 so that we can help you get started on the creation of a Medicaid plan that makes effective use of all of the legal tools available to you.
