When Americans reach the age of 65, they’re typically eligible for Medicare benefits. Medicare is an earned retirement benefit that provides basic medical coverage. Many people assume that Medicare can cover all of their major care expenses.
However, there are significant gaps in Medicare coverage when looking at the actual needs of people in their golden years. Medicare does not cover nursing home expenses or the cost of in-home skilled nursing support. Medicare doesn’t even pay for long-term rehabilitation services if an older adult breaks their hip or suffers a similar traumatic injury.
Older adults in need of long-term care may eventually require Medicaid benefits to cover their costs. Ideally, those in need of Medicaid coverage have already laid the foundation for their application years before they require support. When is the right time to begin the Medicaid planning process?
Early planning is the best option
Ideally, those preparing for retirement take the time to review their circumstances carefully. They can draft multiple valuable legal documents that can protect them during their golden years. Medicaid planning can be a part of that process.
The best time to plan for Medicaid is at least five years before a person needs to apply for benefits. The state looks back at five years of financial transactions when determining Medicaid eligibility. They do not just look at current assets and income.
Any questionable transactions during that time could lead to a Medicaid penalty. Taking the time to transfer assets to a trust, take on co-owners or make strategic gifts early in retirement protects older adults from the possibility of a penalty if they eventually apply for Medicaid.
The same planning strategies can also protect any residual assets from Medicaid estate recovery efforts after they pass. While the most effective Medicaid planning occurs at least five years prior to a Medicaid application, there are strategies that can prove beneficial for those who are likely to need benefits in the near future.
Adults preparing for retirement or adjusting to life after a major diagnosis may want to sit down with a lawyer to discuss their options. Medicaid planning done with experienced legal guidance can give people peace of mind as they age and can protect their resources when they require support later in life.
