Most people hope to remain physically and mentally fit well into their golden years. They likely aspire to age in place by staying in their family homes. Unfortunately, those goals may not necessarily be realistic.
Some people develop serious medical issues, ranging from physical disabilities to dementia. They may then require in-home nursing care or a room in a long-term care facility. Advance planning well before someone might need New York Medicaid benefits can make a major difference in the well-being of an older adult. The failure to plan in advance might leave someone at risk of a significant Medicaid penalty.
The penalty delays benefit eligibility
When someone applies for Medicaid, they are subject to a thorough financial review. The state looks at their current income and the overall value of their countable assets. Not only does the state look at someone’s current finances, but there is also a lengthy lookback period that applies.
The state looks at months of financial records to identify any questionable gifts or transfers. If someone moved high-value assets into a trust two months before applying for Medicaid, that would likely trigger a penalty. So would sizable gifts to family members the year before they applied.
The state determines the overall value of the inappropriate financial transactions and converts that financial figure to a set number of months of medical support. The penalty essentially involves making someone responsible for their own long-term care costs for the number of months that those transfers could have covered.
At a time when someone no longer has control over certain assets, they may have to come up with a comparable amount of money to pay for their care. It is only after they do so that they become eligible for Medicaid coverage. The penalty therefore puts people at risk of not getting the support they need when they are at their most vulnerable.
How Medicaid planning can help
By acknowledging the possibility that someone might require Medicaid coverage in the future, it is possible to plan to avoid the penalty that the state might impose. Proper planning efforts can also protect assets against estate recovery efforts after an individual dies. By diminishing personal holdings or changing the ownership of key assets, those engaged in Medicaid planning can potentially eliminate the threat of a penalty and make it much easier to secure benefits when they need them later in life.
Planning in advance for Medicaid benefits can be as important as standard estate planning. Older adults and the people who love them may benefit from taking the time to learn more about Medicaid, and to understand why advance planning is so valuable.