Gifts & Medicaid Look-Back
One of the most pressing issues within the elder law community these days involves the high and rising costs of long-term care. The national average for a year in a private room in a nursing home is upwards of $85,000, and a 12 month stay in an assisted living facility costs an average of nearly $40,000 across the United States as a whole. So when you are in the planning stages you’re going to have to determine whether or not you will be able to pay for these costs out-of-pocket.
Many people are not aware of the fact that Medicare does not cover these expenses, but this is indeed the case. If you meet the financial eligibility requirements Medicaid can and does cover long-term care, but the sooner you recognize that you are going to have to rely on Medicaid to be able to meet these costs the better because it takes some advance planning to do it in an optimal fashion.
To qualify for Medicaid in Mississippi you cannot have more than $4,000 in assets, so many people engage in what is called the “spend down” strategy to bring their total assets under this number. It should be mentioned that the value of your home, your car, and your personal possessions are not counted against you when you are applying for Medicaid benefits.
One way some people try to spend down is to give gifts to loved ones. Though this is a perfectly logical approach to reducing your assets while in effect giving inheritances to your family members while you’re still alive, the results can be terrible, and there are some things that you have to consider. Medicaid eligibility involves something called the “look back” period, which at present is 60 months long. So any gifts that you give within five years of applying for Medicaid can result in a penalty. This penalty precludes you from receiving benefits for a period of time that is calculated based on the value of the gift or gifts and the average long-term care costs in your state of residence. Also, if you give assets to a child, but later need them, there is no guarantee that the assets will be there for you. The child may have spend the money, or lost it to divorce or creditors.
When it comes to Medicaid spend down strategies, timing is key. The best way to devise a plan is to consult with an experienced Mississippi Certified Elder Law Attorney who has a background guiding people through the complicated Medicaid process.
