The Top 10 Medicaid Planning Mistakes and How to Avoid Them
As the founder of the Elder and Estate Planning Law Firm, I specialize in helping Michigan families protect their estates. Whether you are worried about nursing home expenses that exceed on average $8,000.00 per month, assisted living expenses, having your estate avoid probate court or planning for a special needs child or grandchild, I have helped thousands of families obtain peace of mind when faced with such issues. Often this involves qualifying for Medicaid or VA benefits, creating a trust for an estate or a special needs trust for a disabled loved one. Most of my clients cannot afford $8,000 in nursing home expenses. Even if they can afford these costs initially, their savings will be wiped out in a matter of months. At the Elder and Estate Planning Law Firm it is our mission to help clients pay for long term care without going broke. This usually involves applying for Medicaid benefits. My clients have found this guide to be a valuable resource, and I trust you also will find it useful.
1. Thinking it’s too Late to Plan. Even after a loved one has moved into a nursing home, steps can still be taken to protect assets. With nursing home costs as high as $8,000 a month, giving up on protecting your assets can be very costly.
Solution: Schedule a meeting with a qualified elder law attorney to discuss your situation and how to best protect your assets.
2. Giving Away Assets. Adding a child’s name to the deed for a home or transferring cash or other assets is a far too common mistake. Under the new Medicaid gifting rules that went into effect in 2007, there is now a 5 year look back period for any gifts or asset transfers. Also, the giving away of assets can cause an extended period of ineligibility.
Solution: Before giving away any assets, be sure to discuss your situation with a qualified elder law attorney.
3. Believing the Gift Tax Exemption Applies to Medicaid. Gifts of up to $12,000.00 are exempt from gift taxes. This gift tax exemption however does not apply to the Medicaid rules. ALL gifts, even birthday or Christmas gifts, or gifts to a church or other charity are subject to the 5 year look back period and will result in a period of ineligibility.
Solution: Once again, you should meet with a qualified attorney to ensure that you do not find yourself in a situation where you are ineligible for Medicaid benefits.
4. Failure to Take Advantage of the Spousal Protections. Congress has provided that a spouse still living in the community should not become impoverished by paying nursing home expenses.
Solution: When meeting with an elder law planning attorney, it is important to discuss what legal strategies can be used to protect assets for the community spouse.
5. Failing to Plan Ahead. Far too many people fail to plan for the possibility of residing in a nursing home even after they are diagnosed with a debilitating disease such as Alzheimer’s or Dementia. With new Medicaid rule changes it is more important than ever to be prepared for the possibility of having to apply for Medicaid in advance.
Solution: Meet with a qualified elder law attorney to discuss what precautions you should take to ensure that you don’t lose Medicaid eligibility.
6. Failing to Prepare for Estate Recovery. Estate Recovery allows the state to seek reimbursement for Medicaid expenses after your death. In 2007, Michigan enacted estate recovery. Now, whenever a family member is receiving Medicaid benefits it is critical that also take steps to avoid estate recovery.
Solution: Meet with an elder law attorney to discuss the best way to avoid estate recovery in your situation.
7. Filing a Medicaid Application too Early or too Late. The proper timing of an application is very important. Since the average cost of a nursing home is over $7,000 per month, filing too early or too late can cost thousands of dollars.
Solution: Your Medicaid planning should only be done with the assistance of an attorney who has significant experience in assisting others with situations similar to yours. A Certified Elder Law Attorney (CELA) or a member of the National Academy of Elder Law Attorneys (NAELA) is often a good indication of his or her legal specialty.
8. Not Having a Suitable Power of Attorney. In order to implement any Medicaid planning, it is often necessary to require a power of attorney because the nursing home resident is no longer competent to make any financial decisions. However, just any power of attorney will not suffice. It is critical that the power of attorney authorize the type of planning that may be necessary. This may involve drafting special trusts, surrendering or transferring assets, purchasing an annuity, etc.
Solution: When meeting with an elder law attorney, be sure to discuss the need for a suitable power of attorney.
9. Assuming the Nursing Home Staff Can Help With the Medicaid Application. The nursing home staff is paid to take care of your loved one. They are not experts in the Medicaid rules. If you rely on their assistance you may end up costing you or your loved one thousands of dollars.
Solution: Make sure you seek expert help in filing a Medicaid Application by consulting a qualified elder law attorney.
10. Not Getting Expert Help. Almost everyone knows someone who claims to know about Medicaid. However, with the Medicaid rules constantly changing the information they know is most likely outdated. Medicaid is a complicated area of law and it is best to consult someone who makes a living helping clients in this field. With so much at stake it would be foolish not to.
Solution: Don’t use advice from well intended friends and family members or information you read online as the basis of your Medicaid planning. Consult a qualified elder law attorney to make sure that you don’t make any costly mistakes.