How To Avoid the Top TEN Medicaid MISTAKES/MYTHS
1. Believing that Medicare or health care insurance pays for long-term assisted living or nursing home care.
It doesn’t. You pay for it, unless you do proper planning.
2. Public benefits (Medicaid) is only for the poor.
In 1965, this government public benefit program began that way; however, there is no other government plan for seniors to avoid long-term care cost impoverishment (a $120,000 annual cost in many quality nursing homes) other than private long-term care insurance. As a result, Medicaid now pays for 65% of the long-term care costs of middle and upper middle class assisted living and nursing facility residents throughout the U.S.
3. Thinking it’s too late to plan.
It’s never too late to do long-term care planning, even after a loved one becomes a nursing home resident. Although the 2006 DRA law changed the transfer rules, legal sheltering opportunities continue.
4. Gifting assets too early.
First, it’s your money (or your house, or both). We make sure you take care of yourself first. Don’t risk your financial security by transferring everything to your children. What if they have marital, creditor or addiction problems you are not aware of? Precipitous transfers can cause difficult tax, healthcare and Medicaid eligibility problems. With proper planning, you can maintain control.
5. Gifting assets too late.
After February 2006, asset transfers to others are subject to a 5 year look back and penalty period before public benefits eligibility (Medicaid), unless our planning shortens that penalty time period. Before February 2006, the maximum penalty time was 3 years.
6. Ignoring “safe harbors” created by Congress:
Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, a caretaker child, certain siblings and into a trust for a child or other party who is a minor, blind, disabled and under age 65; transfers to a “Special Needs Trust” or pooled disability trust of accident settlement proceeds or an inheritance received after a person is on Medicaid or SSI.
7. Failing to use protections for the spouse of a nursing home resident.
These protections include the total sheltering of the home from a spouse’s medical spend down; petitioning by the “at home” community spouse for an increase in the limited Medicaid resource or income allowance, shelter of the at‑home spouse’s IRA/401k/403b from the infirmed spouse’s medical spend down.
8. Applying for Medicaid too early/too late.
Too early ‑ will result in a longer ineligibility period. Too late ‑ can mean needless medical spend down and loss of many months of eligibility.
9. Not getting expert help.
A Medicaid application is a complex financial and medical qualification process that most people, or their personal attorneys, deal with only once in their lives. Tens or hundreds of thousands of dollars are at stake. It’s penny wise and dollar foolish not to consult with a certified elder law attorney, who guides clients through this overwhelming process on a daily basis. The fees are a minimal percentage of the amount that can be legally sheltered. Attorneys specializing in other areas or tax and financial advisors shouldn’t “dabble” in elder law since it is a legal minefield that could leave the client ineligible for public benefits for 5 years at an annual cost of $120,000 = $600,000.
10. Tax and Estate Planning should also include health care planning.
All three planning concepts are considered by the certified elder law partners and are coordinated to avoid future problems. As an example, an annual gift of $13,000.00 to 4 children is permitted under the IRS gift tax rules, widely used in estate planning; however, that same transfer renders the gift giver ineligible for Medicaid for 7 months. Patel Law Offices can balance these contradictory impacts.
Patel Law Offices has one of only 325 attorneys nationwide who are certified in elder law (CELA) by the National Elder Law Foundation.
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