Start Early to Protect Your Assets from Medicaid Recovery
Medicaid planning is an essential part of estate planning.
October 19, 2013 /24-7PressRelease/ -- Start Early to Protect Your Assets from Medicaid Recovery
Article provided by Lannik Law, LLC
Visit us at http://www.lanniklaw.com
Many people assume that the Medicaid program will be their safety net to help cover long-term care costs (nursing home) when the time comes. After all, the statistic is that 70% of all long-term care services are paid for under this system. But in order to receive these services, you must be "eligible" for them. And "eligibility" means you have limited assets in your name and you are "medically needy" by the Medicaid program's standards. AND you are expected to spend your life savings in order to qualify. That includes bank accounts, certificates of deposit, stocks, mutual funds, bonds retirement/IRA accounts, and cash values of insurance policies and more!
Given these facts, many people who seek to qualify for Medicaid assistance know they must to "do something" with their assets. Some believe they can simply give away the assets to family members. But gifting assets without consideration of the "5 year look back" rule is an approach that is doomed to fail. That's because this rule requires officials to review your financial transactions for 5 years prior to your application. Under it, any assets (with certain exceptions) that are given away during this time are presumed to have been gifted for the sole purpose of qualifying for Medicaid. Gifts made within the 5 years trigger a penalty period during which an applicant will be denied from receiving Medicaid benefits.
If you have qualified for Medicaid and kept certain allowed assets, the Commonwealth has the right to place a lien on real estate during your life time in certain circumstances, and an after death lien forcing the sale of the family home.
How Estate Planning Can Help
The pitfall for people arises from not knowing when to apply for Medicaid. People are often encouraged by personnel at the nursing homes or other agencies to apply for Medicaid without knowing the full circumstances of an applicant's history or the impact of new laws. Not only is the Medicaid application confusing and time consuming to prepare applying too early or too late may cost thousands of dollars. So when you combine the complicated eligibility and disqualification rules with the tedious application process itself, you have a recipe for disaster.
Although the laws are complicated and always changing there is plenty of sound planning that can be done to protect one's assets. However, the time to start planning is now. It is better to plan before the onset of a chronic illness which makes planning that much more difficult, although not impossible.
There are a number of things that can be done from the simple to the complex, depending on age, financial condition and the circumstances of each individual case. Some of the options include irrevocable trusts, or transfers of the home or other assets utilizing other methods. If it is early enough, you can even do that gifting program you have always wanted to do.
Consult an attorney
As you have just read, many of the methods available to preserve your assets against Medicaid recovery can be complicated and suffice it to say, you should not engage in any of these transfers without first consulting with an experienced attorney who is both knowledgeable in such matters, and who will take the time to develop a plan for you based upon your specific circumstances.
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