Medicaid planning: When is it too late?

While it’s best to prepare for long-term care in advance, sometimes this isn’t possible or isn’t considered until our later years. Medicaid eligibility in some states depends on several factors, but there are steps you can take now to ensure the money you’ve worked hard to accumulate is available when you need it most.

Who is eligible for Medicaid?

State and federally funded Medicaid provides a broad range of health care services to low-income people of all ages. An applicant’s income and “countable resources” help assess their Medicaid eligibility. The applicant’s household size and the Federal Poverty Level (FPL) determine the annual income limits for their geographic location.

Medicaid only covers long-term care for a maximum of 100 days, and the program will not cover long-term care costs unless you meet specific criteria. For example, if your countable resources exceed the allowable limit, Medicaid will deny your application. 

The Medicaid look-back rule

In order to determine your eligibility for Medicaid, your application will be reviewed under the look-back rule. The process reviews your previous financial transactions for a period of time to ensure assets or large sums of cash have not been disbursed in recent years in order to meet the Medicaid asset limit. The look-back period is 60 months for all U.S states, except for California, where the look-back period is 30 months. 

If an applicant is in violation of the look-back rule, eligibility for Medicaid will be denied for a period of time and may result in an additional penalty. Examples of violating the look-back rule include transferring ownership of a secondary property to a relative or selling a high-value asset for much less than it is worth. 

Medicaid planning at the last-minute

While planning for Medicaid in advance is advisable, some last-minute tactics can be used to help an applicant qualify. This process involves converting non-exempt assets into exempt assets. 

In New York State, an applicant’s primary residence can be considered an exempt asset. If you still owe money on your home, you can pay down the mortgage to convert large sums of cash into an exempt asset. Additional exemptions include paying off consumer debt, pre-purchasing burial plots, or non-refundable funeral arrangements.

Medicaid planning can be a complicated process that requires careful consideration of your future medical needs and current financial situation. If you believe that you will be in need of long-term care or have a loved one who may need this type of help, it’s essential to begin the planning process as soon as possible.

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