When planning ahead for your future, a common question that emerges with older adults has to do with Medicaid. This is because the cost of long-term care can be significant and you may need to rely on outside sources like Medicaid in order to afford the services you’ll need if you encounter a long-term care event. Medicaid is available to those individuals who do not have other sufficient assets in order to cover the cost of care. Since the federal government is sensitive to situations in which individuals might try to take advantage of federal help, they employ a number of strategies in order to ensure that the person applying is eligible to receive benefits through the Medicaid program. One of these strategies is the five year look back. 

You might be tempted to begin unloading all your assets as you get older to remove them from your estate as well as to increase your chances of qualifying for Medicaid if you should need it. If this move looks questionable, however, or if you make the decision too quickly without consulting with your estate planning lawyer, Medicaid may penalize you. This is not a situation you want to find yourself in, so it’s important to plan well in advance. The other downside of sudden decisions about your estate is that these could have tax consequences for your loved ones if you’re not careful, so it’s always well worth advance Medicaid planning with the help of an estate planning attorney.

You are ineligible for Medicaid if you transferred assets before applying for your benefits. The government will analyze whether you gave away assets in the five years prior to your application for benefits to determine whether or not you purposefully engaged in this behavior to minimize assets so you would appear eligible for the benefits.

There are legal and valuable strategies you can employ for the purposes of advance Medicaid planning. These should always be discussed directly with your Medicaid planning attorney.