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How far ahead of time do people need to plan for Medicaid?

On Behalf of | May 3, 2023 | Estate Planning |

Retired adults in Virginia usually expect that Medicare will largely cover their health needs later in life. It is certainly true that Medicare provides near-universal coverage for adults over retirement age in re: their basic healthcare needs. However, when individuals need extensive medical support, they sometimes discover that Medicare doesn’t offer sufficient coverage.

Maybe someone had a hip implant fail which requires six months in a rehabilitation facility while the infection clears up and they recover from a revision procedure. Perhaps someone receives a diagnosis of Alzheimer’s disease and has to consider how this condition will affect their health and safety over the next few years.

In cases where individuals require extensive support, such as a room in a nursing home or skilled nursing help in their own homes, Medicaid benefits may be necessary to cover those expenses. Advance planning is crucial for those who may eventually require Medicaid for high-cost elder care needs later in life.

Medicaid will penalize some applicants

The costs involved in providing long-term care for older adults are quite high, which is one reason why even those with robust retirement savings may require Medicaid benefits eventually. When an adult living in Virginia applies for Medicaid for long-term care support, the state will look at not just their current financial circumstances but also the last 60 months of large financial transactions. Sizable gifts and transfers in the five years leading up to a Medicaid application could trigger a penalty.

Additionally, valuable property in someone’s name when they receive Medicaid coverage will be at risk of estate recovery claims after they die. Virginia will seek full repayment for all benefits provided through Medicaid, even if it means selling someone’s home to recoup those costs. Only those who plan ahead can protect themselves from delays in eligibility, large penalties and estate recovery efforts.

Planning at least five years ahead is best

Those who put a plan in place long before their health starts to decline will have the best protection if they ever need Medicaid benefits in the future. Their advanced planning to qualify for Medicaid can also help protect their resources from creditor lawsuits as they age and estate claims after they die.

Asset protection planning and Medicaid planning often involve many of the same steps, and this process can benefit even those who have tens of thousands of dollars set aside for their retirement years. Thinking about the uncertainties of retirement can help individuals and their attorneys put together effective asset protection plans and estate plans that are uniquely tailored to each adult’s anticipated needs.