With the cost of long-term care (LTC) skyrocketing, you may be concerned about your (or your elderly parents’) ability
to pay for lengthy stays in assisted living and/or a nursing home. Such care can be massively expensive, with the potential to overwhelm even the well-off.
traditional health insurance nor Medicare will pay for LTC, some people are looking to Medicaid to help cover this cost. To become eligible for Medicaid, however, you must first exhaust nearly every
penny of your savings.
Given this, you may have heard that if you transfer your house to your adult children, you can avoid selling the home if you need to qualify for Medicaid. You may think transferring ownership of the house will help your eligibility for benefits and that this strategy is easier and less expensive than handling your home (and other assets) through estate planning.
However, this tactic is a big mistake on several levels. It can not only delay—or even disqualify—your Medicaid eligibility, it can also lead to numerous other problems.
In February 2006, Congress passed the Deficit Reduction Act (DRA), which included a number of provisions aimed at reducing Medicaid abuse. One of these was a five-year “look-back” period for eligibility.
This means that before you can qualify for Medicaid, your finances will be reviewed for any “uncompensated transfers” of your assets within the five years preceding your application. If such transfers are discovered, it can result in a penalty period that will delay your eligibility.
For every $6,422 worth of uncompensated transfers made within this five-year window, your Medicaid benefits will be withheld for one month. Any transfers made beyond that five-year period will not be penalized.
So, if you transfer your house to your children and then need LTC within five years, it may significantly delay your qualification for Medicaid benefits—and possibly
prevent you from ever qualifying. Rather than taking such a risk, consult with us to discuss safer and more efficient options to help cover the rising cost of LTC such as long-term care
This article is a service of Jenny Ling, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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