Medicaid coverage is not a given, however. If you have assets or recently transferred assets, Medicaid may determine that you do not qualify for coverage until a certain amount of time has passed. If this happens, you and their family can face significant medical bills. If you cannot pay, the nursing homes may take you to court to get paid.

What steps can you take to avoid this? First, before applying for Medicaid, get a better understanding of the timelines – known as lookback periods – that can affect your eligibility. Then you can engage in proper Medicaid or asset protection planning in advance of these timeframes. A good age to begin long-term care planning is around age 65, although everyone’s situation is different.

Individual states run Medicaid programs, and every state has different rules regarding Medicaid eligibility. These programs were designed as a payor of last resort — in other words, to qualify, you must meet strict requirements. There are two primary types of Medicaid benefits: home care and skilled nursing home care.

Lookback Periods

You must submit an application to your local Medicaid office to qualify for these benefits. As part of this process, the state will look at any money or property you may have transferred within the  lookback period. In New York, this period of time will soon be 30 months for home care and 60 months for skilled nursing care.

These lookback periods can have serious consequences. If you have not engaged in appropriate asset protection planning, you may not be able to qualify for home care or nursing home care for years.  The result is that many elderly individuals must then spend down their savings and liquidate their assets to pay privately for their care before Medicaid starts covering anything. If a person no longer has resources and is subject to a disqualification penalty period, family members may need to step in and bear these costs on their own.

So, what can you do? The answer is to start planning as soon as is practical.

Options to Explore

Speaking with an elder law attorney can help you and your loved ones explore options available to avoid you or them being personally responsible for the costs of your care. Some of these options include:

  • Medicaid Asset Protection Trust — One common approach is placing assets in a Medicaid Asset Protection Trust. You may be able to use this to shelter various assets such as stock accounts, savings, a home, and much more.
  • Pooled Income Trust — Another option you may explore is contributing income that exceeds Medicaid allowances to a Pooled Income Trust. This can allow you to qualify for Medicaid while diverting excess income to a trust that pays qualified expenses on your behalf. This will enable you to benefit from the income and not spend it on things Medicaid could have otherwise covered.
  • Spousal Refusal — Your spouse may also have options that can help you qualify for Medicaid. One such option includes exercising a right of spousal refusal — a process by which the income and assets of your spouse can be removed from consideration in your Medicaid eligibility analysis.

Finally, it is important to understand that certain transfers are permissible under Medicaid rules without triggering a penalty period and see if such transfers can be made in your case.

Without proper planning, individuals with assets and income exceeding specific state-set thresholds would have to spend this income and their assets on their care or exempt items before they can receive Medicaid benefits. For assistance in planning, schedule an appointment with the attorneys at Kurre Schneps LLP.