Medicaid Planning

Many people wonder how to protect their assets lawfully, while still remaining eligible for benefits like long-term care. The whole notion of transferring assets, in anticipation of a nursing home or assisted living facility, is so that the cost of long-term care (sometimes running upwards of $80,000 annually) can be covered by Medicaid.

Medicaid is a social welfare program that provides health care and long-term care for those with limited means. It can be used to pay for long-term nursing home and assisted living facility costs. However, just like a creditor can challenge the transfer of assets, the federal government can and will challenge transfers made before qualifying for the benefits of Medicaid. The laws governing asset transfers vary from state to state, but generally, a Medicaid recipient must have no more than $1,500 to $2,000 in assets (subject to some exemptions) and receive no more than $75 a month in income to be eligible.

There is a key difference in long-term care support through Medicaid versus Medicare. Medicare is available for everyone over the age of 65 who has paid into social security. However, only a minimal portion of Medicare (about 100 days) covers a nursing home or assisted living bill. Afterward the 100 day period, the resident senior must privately pay or must qualify for Medicaid.

Ideally, an applicant may want to gift or deplete assets 60 months or more before needing to apply for Medicaid to pay for nursing home care. An applicant cannot simply transfer assets right before applying for Medicaid. The 60 month look-back period ensures that no assets were transferred improperly. Medicaid caseworkers challenge improper transfers made within the 60 month look-back period, and are usually successful in denying Medicaid coverage to the extent of such improper transfers. The problem is that most applicants don´t consider applying for Medicaid to cover long-term care until that very brief Medicare window runs out. By that time it is too late to do advance planning for the gifting of assets or implementing their strategies. The costs of long-term care are high, and in cases where an applicant is denied Medicaid coverage, those costs must come from the senior’s personal assets.

The failure to plan or improper Medicaid planning can result in the complete depletion of assets and leave nothing for the senior’s family upon death. All of the assets the senior has accumulated throughout his/her life will instead be entirely spent on long-term care. Therefore, one must understand the appropriate timing of asset transfers and other strategies in order to secure eligibility for Medicaid coverage. Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial planning. He also practices elder law planning, estate planning, and Medicaid planning in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Please contact him to establish a plan for you or a loved one to avoid these heartbreaking problems.