There are two primary government insurance programs that people rely on when they get older. Adults who are 65 can start receiving Medicare benefits for their standard health care needs. Those with more intensive medical requirements and those who are not yet 65 may instead need Medicaid benefits.
Medicaid covers more than Medicare does, but it is also a need-based program. Adults who hope to qualify for Medicaid will typically have to spend all of their money and resources first. Other than their home and a few other exempt possessions, applicants are held to a very strict financial standard.
Planning well before you need benefits can increase the likelihood that you’ll receive Medicaid approval if you require nursing home care or other services not covered by Medicare as you age.
Medicaid will check for recent transfers
The government won’t just take your word regarding what assets you hold. They will conduct a thorough up financial analysis. The Medicaid look-back period for your financial records is five years. Any major gifts or transfers in those five years can impact your benefit rights.
You may have to pay the same amount as the value of those transfers out-of-pocket before the government will allow you any Medicaid coverage. This rule applies not just to property that you give to your children but also to anything you move in to a trust.
Strategic gifts and trusts are often part of the Medicaid planning process. The sooner you transfer and change ownership of your assets, the more likely you are to avoid penalties if you ever apply for Medicaid.
