Different government benefit programs cover different needs. Government insurance programs can help connect otherwise-uninsured people with necessary medical coverage and treatment. Unlike Medicare, which only requires that people reach a certain age to qualify, Medicaid has strict financial requirements.
There are limits both on income and on the assets someone can hold. With the exception of a house where they live, most valuable property has to get spent by an applicant before they can qualify for Medicaid.
Medicaid planning involves taking steps now to make it easier for you to qualify for Medicaid when you need it in the future. Those steps often include making strategic gifts, changing the ownership of certain assets or creating a trust. People do this to avoid incurring a penalty under the Medicaid lookback period. How does the lookback period work?
Five years of your financial records face careful review when you apply
To make sure that people don’t abuse Medicaid, the government holds individuals responsible for major transfers and gifts made in the five years prior to their Medicaid application. When you apply for Medicaid, any major transactions in the last 60 months could result in a penalty.
The penalty is based on the amount of inappropriate gifts or transfers, but the government expresses it as a number of months of care, rather than a specific financial amount. You will have to cover those months of care out of your own pocket if you incur a penalty before Medicaid will pay for anything.
Careful planning can help you avoid those penalties and protect your limited resources as an older adult who needs Medicaid coverage. An experienced attorney can provide valuable guidance.