Can Medicaid Really Seize Your Assets?

How Far Back Can Medicaid Go to Seize Assets to Pay for Long Term Care?

( – Advances in medicine means people are living longer, but it’s also leading to the need for long term care. Even the best insurance only covers limited hospitalization and recovery periods.

A major health event requiring long term care can trigger a series of events that can wipe a person out financially. To protect assets from seizure in the event that long term care is needed, estate planning must be done at least 5 years in advance.

Why 5 years? Medicare and other related supplemental policies have limited coverage for short-term skilled nursing needs, but those programs don’t pay for long term care. The majority of long term care falls onto the shoulders of state Medicaid programs, for those who qualify for Medicaid and Medicare. Medicaid has a five-year lookback period when it comes to assets.

Anything transferred or gifted in the five years before a person passes away may be subject to seizure or penalty. That means if someone gifts or transfers their assets the day before they enter long term care and die in long term care three years later, those assets may be seized or penalized.

Working with an attorney familiar with estate planning is crucial to protecting assets before the need for long term care. They can make recommendations such as:

  • Begin gifting or donating money while still mentally well.
  • Create a life estate to transfer future ownership so that an individual can remain on the property as a life tenant but the property immediately transfers to a remainderman after death.
  • Transfer liquid assets into annuity funds.
  • Create irrevocable trusts and/or pour-over trusts.
  • Guide a community spouse on how to properly spend countable savings on those Medicaid-exempt items such as a home, car, or other household goods.
  • Transfer income to a community spouse

These are just some of the income-sparing techniques available. Most of them can be used at any time, rather than waiting on illness or other medical issues to create a need for action.

Contact an experienced estate planning attorney sooner rather than later to get more peace of mind when it comes to the financial future.

~Here’s to Your Financial Health!

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