Most senior citizens will require help with their activities of daily living at some point in time. About 35 percent of them will eventually reside in nursing homes, and these facilities are very expensive. On Long Island, you can expect to pay about $170,000 for a year in a nursing home right now, and costs have been rising year after year.
A lot of people hear this statistic and don’t think much of it because they know that they will qualify for Medicare when they reach the age of 65. It would be logical to assume that this program would pay for long-term care since it is intended for seniors, and such a high percentage of them will need living assistance.
In this case, logic does not hold sway, because Medicare does not pay for the custodial care that nursing homes provide. Medicaid is another government health insurance program that does pay for this form of care, and in fact, most people in nursing homes are enrolled in the Medicaid program.
Five-Year Look Back Period
You are probably aware of the fact that Medicaid is intended for people with very limited financial resources. The reason why so many elders that were never poor qualify for Medicaid is because they take steps to divest themselves of assets before they apply.
That sounds simple enough on the surface. If you ever find out that you require nursing home care, you can give your loved ones their inheritances in advance and then apply for Medicaid.
This is not possible because there is a five-year look back period. If you give away assets within five years of the submission of your application, it will be denied. You would not necessarily be permanently precluded from eligibility, but you would have to wait out a penalty period.
The duration of this interim would be based on the amount of the divestitures as they compare to the cost of nursing home care in the state of your residence. Simply put, if you gave away enough to pay for two years of nursing home care, your eligibility would be delayed by two years.
Medicaid Caregiver Child Exemption
Your home is not considered to be a countable asset when you are applying for Medicaid to pay for long-term care. However, before you breathe a sigh of relief, you should be aware of the potential impact of Medicaid estate recovery.
The program is required to seek reimbursement from the estates of people that were using Medicaid during their lives. Yes, you could gain eligibility even if you own a home, but it could be attached during these recovery efforts after you pass away.
However, there is one notable exception to this rule. If one of your children has lived with you for at least two years providing a level of care that has allowed you to remain at home instead of entering a nursing home, you can give the home to your child. Under these circumstances, the look back rule would not apply.
The home would then belong to the adult child caregiver. It would no longer be yours, and as a result, it would be out of the reach of Medicaid during recovery efforts.
Access Our Special Reports
Our attorneys have prepared a number of very useful special reports that you can read to gain a more thorough understanding of elder law matters. They are being offered free of charge right now, so you should certainly take advantage of this golden opportunity to build on your knowledge. To get your copies, visit our reports page and follow the simple instructions.
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- What You Need to Know about Medicaid’s “Look-Back” Rule - February 1, 2023
- What You Need to Know about Elder Financial Exploitation - January 25, 2023
- What Is an Asset Protection Trust? - January 18, 2023