People often hope that they can rely on Medicare for most of their health needs later in life. Most working adults in Texas qualify for Medicare coverage when they retire, as do their dependent spouses. Older adults can rely on Medicare for many of their basic medical needs later in life. Unfortunately, there are numerous limitations to what Medicare covers, and people may need to instead apply for Medicaid. All too often, retired Texas adults do not plan in advance to help them qualify for Medicaid. That oversight can put them in a very precarious financial position.
They may try to plan at the last moment, resulting in Medicaid penalties or denied coverage. They may also be unable to preserve key assets, like their primary residence, from Medicaid estate recovery efforts after they die. Planning to qualify for Medicaid before one needs benefits is of crucial importance for those with limited resources or a desire to preserve certain assets for their loved ones.
Transfers and gifts can trigger a penalty
The primary reason that people need to plan in advance for Medicaid is that the state penalizes those who make major moves trying to qualify for benefits shortly before applying. There is a five-year or 60-month lookback period for Medicaid benefits. Any large gifts or transfers into a trust during those 60 months could trigger a penalty.
The applicant may not receive benefits until they pay for a set number of months of care with their own resources. That obligation comes at a time when they need a bed in a nursing home, rehabilitative care or skilled nursing support in their home. They may not have any way to cover those expenses with their own resources.
The only way to avoid a penalty is to plan at least five years before someone thinks they may need benefits. Therefore, Medicaid planning is often an important part of the overall elder law process. Those preparing to retire and live in comfort in their golden years may need to address possible future medical needs in addition to preparing certain documents, like powers of attorney, for their protection as they age.
Understanding the Medicaid lookback period, and seeking legal guidance if questions or concerns warrant, can help people to more effectively plan for comfort and financial stability in their golden years.