The most common Medicaid mistakes are violating the five-year look-back period by transferring assets below fair market value, liquidating exempt assets to pay for nursing home care, and putting off Medicaid planning until it is too late. Other common mistakes are Medicaid application related: missing deadlines and submitting incomplete paperwork.
Federal law provides that the finances of all Medicaid applicants are scrutinized for the five years preceding their application. If an applicant has done any asset transfers for less than fair market value, they will receive a penalty period, during which they are ineligible for Medicaid benefits. Another common mistake is liquidating exempt assets, like the family home, to pay for nursing home care. Often, one’s life savings is mostly contained in equity in the family home. When Medicaid assesses a person’s assets using their eligibility rules, they do not count the family home towards the asset limit. Therefore, most experts say that the home should not be sold to pay for long-term care.
One of the most common mistakes that people don’t even realize they are making is putting off estate planning and end-of-life planning until it is too late. Prior planning can ensure that spend downs are minimal and that assets are preserved for the Medicaid recipient’s family members and loved ones, rather than using them to pay for care. As a bonus, many of these plans also help avoid probate. The Medicaid Asset Protection Trust (MAPT) is a vehicle to preserve assets prior to the five-year look-back period.
When pursuing Medicaid planning, it is important to visit a law firm familiar with elder law. Elder law attorneys are often familiar with Medicaid laws and Medicaid programs. Getting legal advice ahead of time can prevent costly mistakes later. QMC, although not a law firm, can assist with both Medicaid planning and Medicaid applications.