Common Mistakes Made By Seniors
By Estate Planning Attorney Rick Law, advocate for seniors and baby-boomers in Kane County, Illinois. Too many people make grave mistakes, spending or giving away money freely before they unexpectedly need to qualify for Medicaid. That said, when planning is done properly, it’s often possible to qualify for Medicaid while saving some of your assets and spending some others in ways you’d prefer to spend them. Despite the hurdles of qualifying for Medicaid, it can be a viable source for paying for long-term care needs – if it is planned for correctly. There are, however, some things to keep in mind that can prevent the qualification for Medicaid benefits. Some things to be mindful of include:
- Giving away assets. It’s your money or your house, or both. It needs to be understood that individuals shouldn’t put their security at risk by putting all of their assets in the hands of their children. Precipitous transfers can cause both difficult tax and Medicaid problems.
- Ignoring important safe harbors created by Congress. Certain types of asset transfers are allowed without jeopardizing Medicaid eligibility. These include transfers to disabled children, caretaker children, transfers to certain siblings, and transfer into trust for anyone who is disabled and under age 65. Others include a transfer to a “pay-back” trust if under age 65, as well as a transfer to a pooled disability trust at any age.
- Failing to take advantage of protections for the spouse of a nursing home resident. These protections can include purchasing special types of immediate annuity, petitioning for an increased community spouse resource allowance, and in some cases petitioning for an increased income allowance or refusing to cooperate with the nursing home spouse’s Medicaid application.
- Applying for Medicaid too early. In some instances this can result in a longer period of ineligibility.
- Applying for Medicaid too late. This can mean the loss of many months of eligibility.
- Confusion about the difference between lifetime liens on property and estate recovery. There are a number of exceptions to lifetime liens on property, but for estate recovery there is only a deferral for a surviving spouse and a hardship waiver.
- Not getting expert help. This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars could be at stake. It is extremely important that people work with experienced elder law attorneys before trying to navigate through the Medicaid maze themselves.