Although your initial estate plan may be rather simplistic, as both your estate and your family grow over the years, your estate plan should grow along with them. Additional strategies and tools should be incorporated into your estate plan in order to address your changing needs and goals. One component that most people choose to include in their estate plan as they near retirement age, if not before, is Medicaid planning. Like most people, you may be aware of the need for Medicaid planning; however, you know very little about what Medicaid planning actually entails. Lack of knowledge often leads to mistakes. A better understanding of the following top five Nashua Medicaid planning mistakes will help you avoid making them yourself.
- Failing to recognize the need for Medicaid planning. By far, the single most common Medicaid planning mistake is not planning. You might make it all the way through your working years without ever needing to turn to Medicaid for help with your healthcare expenses because you were fortunate enough to have employer-sponsored health insurance. Like most seniors, you also expect to rely on Medicare to cover your healthcare expenses during your retirement years, giving you a false sense of security that causes you to believe you will never need help from Medicaid. The problem is that Medicare won’t cover long-term care (LTC) expenses. With the odds of needing LTC increasing every year, and the cost of that care increasing along with your odds, Medicaid may be your only hope for help paying for LTC should you need it. If you fail to include Medicaid planning in your estate plan, however, you could lose valuable assets as a result of the need to qualify for Medicaid when you need it.
- Not understanding the basic Medicaid eligibility rules. In order to understand why Medicaid planning is necessary, you need to understand the basic Medicaid eligibility rules. To qualify, an applicant cannot have income nor “countable resources” that exceed the program guidelines. The “countable resources” limit is where most seniors run into problems because in most states you cannot have non-exempt assets valued at over $2,000 to be eligible for Medicaid.
- Violating the transfer rules. There was a time, not all that long ago, when an applicant could simply transfer excess non-exempt assets to an adult child (or anyone else) to reduce the value of his/her countable resources. Medicaid now uses a five-year “look-back” rules that prohibit asset transfers for less than fair market value within the five year period prior to applying for benefits. If you did make a disqualifying transfer, Medicaid may impose a waiting period during which time you will not be eligible for benefits.
- Creating the wrong type of trust. People are often familiar with the concept of a “Medicaid trust” as an asset protection tool used in Medicaid planning. While a Medicaid trust can help protect your assets, it must be the right type of trust and include the right language to work as intended. The best way to ensure your trust works as intended is to have your estate planning attorney help you create the trust.
- Thinking it is too late to save assets. The five-year look-back rule makes it even more important to start Medicaid plan long before you actually need to qualify; however, if you find yourself suddenly faced with the need to qualify for Medicaid and you did not plan ahead, don’t assume that all is lost. Consult with your estate planning attorney about last minute Medicaid planning strategies that may be able to help save at least some of your non-exempt assets.
Contact a Nashua Medicaid Planning Attorney
For more information, please sign up for one of our upcoming FREE seminars. If you have additional questions or concerns about Medicaid planning, contact the experienced Nashau estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.
Daniel DeBruyckere
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