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Getting benefits isn’t the only reason for Medicaid planning

On Behalf of | Mar 13, 2023 | Medicaid

Medicaid planning is a very important process for older adults who think that they may need to move into a nursing home eventually. Advanced planning helps someone get benefits more quickly when their health begins to decline. Otherwise, there is a lengthy lookback period that could result in penalties and delayed benefits. 

Unless someone makes gifts and transfers into trusts years before applying for Medicaid, those transfers could trigger penalties. However, older adults often don’t realize that benefit delays aren’t the only reason to engage in advance Medicaid planning. The estate recovery program is another common incentive for people to put together Medicaid plans. 

How estate recovery works

Technically, Medicaid benefits in New York are subject to federal rules, including a rule that requires state Medicaid programs to seek repayment for benefits provided after someone dies. Medicaid will make an estate recovery claim in the New York probate courts for potentially the full value of all medical coverage provided to the individual. 

Such claims typically take precedence over the rights of beneficiaries and family members, meaning that paying off someone’s nursing home care could lead to their estate liquidating all of their assets and having nothing left for their children and other beneficiaries. Even homes that were not a complicating factor during the application process our vulnerable to recovery efforts when someone dies. 

Any assets that will require probate proceedings to transfer when someone dies will be at risk of claims made by the Medicaid estate recovery program or other creditors. Engaging in Medicaid planning before someone needs benefits is an effective way to protect their legacy.