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Why Medicaid planning needs to happen well in advance

| Jan 7, 2020 | Uncategorized |

About 1.2 million Coloradans were enrolled in Health First Colorado, the state’s overarching Medicaid program, as of November, 2019. It’s a figure that speaks to the importance of the program for many people, particularly older individuals that may need long-term health care services or support.

Ensuring an older loved one is eligible for Medicaid, however, is much easier said than done. In most cases it will require some proactive planning and strategic spending decisions.

A loved one may have to spend down

In order to be eligible for Health First Colorado, including some of its subsets, an older adult has to meet income and asset limits. If they make more than a certain amount a month, or have assets in totality worth above a specific figure, then they will have trouble securing Medicaid benefits. These thresholds are different depending on a person’s family situation and care needs, but generally they are quite low.

This leaves some families in a bind. An aging parent makes too much money to be eligible for Medicaid, but doesn’t have nearly enough money to realistically support their long-term care needs. This is when spending down may be a sensible option.

To spend down, a loved one puts money toward certain eligible expenses, and by doing so, brings their total income and assets below the eligibility limit. If done properly, the person can take care of their needs and receive Medicaid benefits, in turn offering some relief to their family and loved ones.

Spending down is quite complicated

Unfortunately, spending down is not as simple as it may sound. Not only does one need to be mindful of how much they need to spend, but how to spend it – for example, are the assets liquid and able to be turned into cash? In addition, are they spending down on eligible items and expenses?

There is another thing to keep in mind. Officials are wary of people quickly unloading pricey items in order to qualify for Medicaid. Because of this, there is something called a look-back period. Colorado’s look-back period is five years prior to receiving Medicaid benefits, and during those 60 months, the Medicaid hopeful cannot give any gifts. If they do, it may result in delayed receipt of benefits.

Due to all of the moving pieces and complex regulations, it’s often beneficial to get help with this type of Medicaid planning. Knowledgeable guides can help someone avoid these potential issues. But in nearly all cases, the sooner you can get a loved one to start thinking ahead, the better.

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