Many older adults preparing for retirement will start receiving Medicare benefits that cover their average healthcare costs. They can also carry supplemental insurance for prescription medication and other needs as they age.
However, Medicare has numerous limits, and older adults living on a fixed income frequently find themselves struggling to cover healthcare costs as they age with their savings. Nursing home costs and the expenses involved in bringing skilled nursing support into your home are among the costly healthcare expenses that Medicare does not cover.
You may find yourself in need of Medicaid benefits as you grow older, which means that you need to plan for those Medicaid benefits now.
Last-minute planning will result in a penalty
Those hoping to qualify for Medicaid when they realize they need support may make drastic financial moves in the hopes of diminishing their personal resources. The state of Texas is aware that people may transfer property into a trust or gift assets to family members to reduce their personal holdings and qualify for Medicaid coverage.
To prevent inappropriate financial behavior by those who could pay for their own medical needs, Medicaid imposes a lookback period when you apply for benefits to cover nursing home care and similar expenses, the state will look back at 60 months or five years of your financial records for large transfers and gifts.
If you made any transfers shortly before applying, the state will hold you accountable for those transfers by converting them to a number of days of residential care. Once the state determines that a penalty applies, you will have to pay for a certain number of days of care from your own resources, which you will have already diminished at that point.
The Medicaid penalty can leave someone in severe debt or unable to move into a nursing home because they cannot pay for services yet. Advanced planning protects you from the penalty that the state might impose and allows you to qualify for benefits quickly if the need ever arises.
As an added benefit, Medicaid planning can also help preserve your assets from creditor actions when you live on a fixed income and can also help streamline the estate administration process in many cases. Educating yourself about the Medicaid penalty can help you see the true value of Medicaid planning as you prepare for retirement.