People of modest means with total assets between $25,000 to $500,000 should talk with an elder law attorney about Medicaid planning. Planning may be addressed as part of their general estate plan. The individual’s or couple’s goals that should be discussed with legal counsel may include:
• avoiding a Medicaid lien being placed on the family home,
• preserving a modest financial legacy for children,
• maintaining sufficient income for the spouse that will be able to remain at home,
• placement in a facility close to the family,
• planning for a disabled adult child or spouse,
• obtaining the best quality care for the institutionalized spouse,
• purchasing long term care insurance.
The sooner you plan the more likely an individual and a couple are to maximize asset preservation. Since Medicaid uses a five year look back period the ideal time to plan is at least five years before you need Medicaid, but since none of us have a crystal ball as to when we will need nursing home level of care, the time to plan is now. Then update the plan when serious health problems arise, and be certain the plan is fully implemented just before applying. Those who have done no planning should always consult with an attorney that focuses their practice on Medicaid asset preservation before applying for Medicaid. Often thousands of dollars can be saved even the day before the application is filed. Sometimes it is possible to preserve additional assets even after the application has been made.
Few people understand that there is one set of rules for qualifying for Medicaid to cover nursing home and community long term care and another set of rules for what will be protected from Medicaid liens when the person dies. The eligibility rules for couples are different than those for individuals, which means if the community spouse predeceases the institutionalized spouse the initial plan may fall apart. Therefore, a new estate plan, which may include a special needs trust for the institutionalized spouse, should be made after one spouse goes in a nursing home. Prenuptial agreements used with a second marriage offer no protection from Medicaid liens.
There are many strategies for accelerating Medicaid eligibility and a few for post Medicaid eligibility. Failure to plan almost always costs a lot of money. Failure to follow the plan outlined and advised by the attorney will almost always cost a lot of money. Plan now, plan again before filing, definitely do planning if denied, and it may not be too late to plan after eligibility is established.