Those who have worked throughout their adult lives may not like the idea that they may eventually require Medicaid benefits. Some people even find the implication that they will eventually require Medicaid to be insulting. However, Medicaid exists for a reason and there are good reasons why the majority of Americans find that they need to look into this option. It helps provide financial support for those who cannot pay their own medical costs because of limited countable assets and limited household income.
In Colorado, many older adults will find that they need Medicaid late in their retirement years because of the extreme cost generated by skilled nursing care in their own homes or the need for a room in a nursing home. Those who find the idea of such benefits distasteful may set themselves up for stressful situations by delaying the planning process. The best-case scenario often involves putting together an estate plan that addresses the possible future need for Medicaid before one’s health evolves substantially. How far ahead of time does someone need to plan for Medicaid benefits as they age?
The state looks back at years of records
If someone’s current financial circumstances were the only thing that mattered in the Medicaid application process, it would be very easy for people to abuse the system by giving away their assets or quitting their jobs when they need benefits. Therefore, applicants speaking long-term care benefits in particular will be subject to a lookback period.
The state will look at five years or 60 months of their financial transactions. Any major gifts or asset transfers to others during that time will trigger a penalty. The higher the value of the assets and gifts transferred during those five years, the more months of care the state will require someone to pay for using their own resources before Medicaid will cover their costs. Ideally, people will have engaged in Medicaid planning more than five years before they need benefits so that transferring assets to a trust or making gifts to family members will not trigger any sort of penalty.
Medicaid planning benefits the whole family
Older adults who might eventually rely on Medicaid to cover some of their care costs can obtain peace of mind from careful planning long before they need benefits. Their loved ones may also benefit from their planning efforts, as they can preserve their assets from estate recovery efforts that might diminish what beneficiaries eventually inherit.
Ultimately, completing Medicaid planning at the same time as one reviews or creates an estate plan can help people to better ensure that they have the support they require if their health declines with age.
Written by Marco Chayet – founder and managing partner of Chayet & Danzo, LLC. and ColoradoElderLaw.com. Mr. Chayet is also the Public Administrator of the 18th Judicial District, serving as a fiduciary for the counties of Arapahoe, Douglas, Elbert, and Lincoln. He is the past chairman of the Elder Law Section of the Colorado Bar Association and the current Elder Law Section delegate to the Colorado Bar Association Board of Governors.
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