Realizing that a loved one may be losing their mental capacity is undoubtedly stressful. Add to that the need to consider whether future care may be necessary, and the situation can be overwhelming. Planning ahead is the best option, but not everyone becomes aware of the potential need for long-term care early on. When professional long-term care may be necessary, determining how to cover the cost is often a concern as well. Medicaid is usually an option. However, need-based government assistance programs, such as Medicaid, have requirements that must be met in terms of eligibility. Having a plan is essential, but is it ever too late?
It is never too late to plan
No, it is never too late to plan for Medicaid. Certainly, the best idea is to plan ahead in order to ensure you or your loved ones will meet the qualifications. But there may still be options, even if you suddenly find that a loved one needs to apply for Medicaid benefits.
Your options must be carefully considered, however, because you cannot merely transfer your property or assets to someone else. A federal law, passed in 2005, created a period of ineligibility for anyone who gives away their assets within the past five years. This penalty period only applies to those needing long-term care in an institutional setting, or receiving home health care. This five-year “look back” period begins when the application for Medicaid is made. For this reason, timing and early planning are critical.
Why is Medicaid planning important?
As you may already know, Medicaid is a need-based government assistance program that pays for necessary medical services. To be eligible for Medicaid, an individual’s resources cannot exceed $2,000. When calculating resources, a residence or homestead is not included. Nevertheless, it is easy to exhaust your savings before Medicaid will begin to pay for the cost of long-term care. The purpose of Medicaid planning is to attempt to avoid this situation.
The ability to apply for Medicaid depends on each person’s unique circumstances. Therefore, the five-year look back period may not apply to everyone. Those needing only acute care, which includes hospital or physician services, are still eligible to receive benefits for those services, regardless of prior asset transfers.
Medicaid trusts may also be an option
If you place assets into a trust for your children, you can protect those assets while still qualifying for Medicaid. That is the purpose of a Medicaid Trust. With a Medicaid Trust you can be the beneficiary, and your children or spouse are considered residual beneficiaries. This means, you can receive income from the trust, up to the maximum amount allowed by Medicaid, and still remain eligible for benefits.
As with most things, planning for long-term care as early as possible, is always better. Contact the estate planning attorneys at Sexton, Bailey Attorneys, PA for questions regarding Medicaid Planning in Arkansas.