Expecting Medicaid to cover long-term care? You must plan ahead

| Jul 10, 2020 | Medicaid Planning

If you are healthy and collecting a steady income right now, it can be difficult to imagine your life any other way. However, it is crucial to think about what you will do if your situation changes.

For instance, do you know what you will do if you require long-term care due to illness or injury? If you expect that you will just apply for Medicaid, you could be making an expensive mistake by failing to do some planning right now.

Lack of planning can mean draining your assets

To qualify for  Medicaid for long-term care, called Health First Colorado, a person cannot have more than approximately $2,000 in countable resources. These resources can include:

  • Cash and checking accounts
  • Individual Retirement Accounts
  • Real estate (besides your primary residence)
  • Recreational vehicles, including boats and RVs
  • Cars (if you have more than one)

For a list of resources that do not count toward the limit,  visit this page.

In an effort to meet these limits, a person may need to spend down their resources first.

But this is where Medicaid planning can prove to be valuable.

Medicaid planning can allow a person to protect property and preserve resources while still qualifying for Medicaid. Understand, though, that you must do this planning at least five years in advance to maximize your protection.

The five-year look-back period

Simply transferring property for less than fair market value or gifting some money to your family to qualify is generally not going to help you qualify for Medicaid. This is because the program will review your financial transactions during the five years before you become eligible.

During this time, any transfers or gifts you make for less than market value can trigger eligibility delays.

However, by starting your planning before that period, you can take advantage of strategies to avoid delays and unnecessary spending.

Medicaid can be a critical resource if you need long-term care. As such, it can be wise to make plans that allow you to utilize it while also preserving assets.