In Colorado and all states, long term nursing care and similar or related services for senior citizens are not covered by Medicare. Instead, for those who can't afford such care, including residence in a nursing home, they must qualify for Medicaid to receive benefits. Medicaid planning through an elder law attorney may be required well before the need for those benefits arises.
Medicaid planning will assure a far greater probability that benefits will be approved. One of the purposes of such planning is to transfer assets out of the senior's name and into those family members who can own the property without consequence. The problem is that this is only effective if done later than five years from the date of requesting Medicaid for long term care.
If some of the assets were transferred within the five-year window, the benefits will be held up until the patient pays the amount that is applicable. This is called the penalty period. A formula is applied by Medicaid authorities to determine the precise amount that will have to be paid during the penalty period.
Revocable living trusts may be assets that are counted against one's eligibility for Medicaid. This is applicable if the trust is revocable by the Medicaid applicant and if the applicant can pull the trust assets back into his or her name. In some cases, if the spouse has created the trust, there will be penalties against the applicant's qualifications, depending on certain asset and income limitations imposed on the spouse of the applicant.
Due to the five-year lookback, which is applied in Colorado and elsewhere, it is best to consult with an elder law attorney about Medicaid planning as soon as possible. This will increase the chances of making valid transfers that will be aged for over five years by the time a need for benefits arises. There are other remedies and options that the elder law attorney may recommend, depending on the circumstances presented.
Source: nj.com, "How trusts fit in with Medicaid planning", Karin Price Mueller, Dec. 26, 2017