Perhaps you have realized that you need some help with daily living activities or are tired of rattling around in a big house by yourself. You would like to go to a place where you can socialize and have the peace of mind that you are being taken care of.
One mental roadblock could be your assets. That is, you are not wealthy enough to pay for years of care out of your pocket, but you want to keep your house, jewelry and the like for your children. So, you do not want to sell these assets, and the solution can seem obvious: Simply give the property to your children now, and qualify for Medicaid. However, that could end up rendering you ineligible. Here is a look at why.
Five-year lookback rule
Medicaid has a rule in which you can be penalized for gifting assets in the five years prior to your application, whether these assets are houses, cars, cash or something else. One thing to note, however, is that if you are married, your spouse can continue to live in the house while you enter care. Spousal protection rules allow your spouse to keep his or her income and possibly even some of yours, along with your house and half of many other marital assets.
So, you do not need to worry about protecting your spouse, but you could be putting your future in jeopardy if you decide to start distributing assets to other people when you are likely to fill out a Medicaid application soon.
If you have more than five years to play with, then there are several things you could do to ensure that your children and other heirs end up with the assets you want for them. However, you also do not want to start giving away assets too early.
A lawyer can help you determine the best strategies and timing for your Medicaid planning. If your needs are immediate, you should still meet with someone. The application is complicated, and there are likely a few things you can do now to maximize your assets while still qualifying for Medicaid.