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What Does Medicaid’s Five-Year Look Back Rule Have To Do With Your Estate Plan?


Relying on Medicaid for nursing home care is no one’s idea of a dream come true.  Once you enter a nursing home as a Medicaid recipient, the state does everything within its power to reimburse itself for its so-called generosity to you.  Your Social Security check goes straight to Medicaid, and you get a stipend (the dreaded Personal Needs Allowance) of only $130 per month.  The accommodations that Medicaid pays for are anything but plush.  Florida gives Medicaid nursing home residents similar toiletries to the ones it gives prison inmates, and if you want clothing other than a hospital gown, you have to spend your Personal Needs Allowance money to buy it.  To make matters worse, after you die, Medicaid engages in the practice of estate recovery, where it tries to get the probate court to award it your remaining money to offset the cost of your nursing home care, lest your family inherit anything. It isn’t ideal, but for many seniors, Medicaid nursing home care is the only feasible option.  An Orlando estate planning lawyer can help you avoid mistakes that might jeopardize your Medicaid eligibility.

How to Spend Down Your Assets Without Medicaid Finding Out

To qualify for Medicaid, the value of your assets must be below a certain level.  Certain assets are exempt, such as your house, if your spouse will continue living there after you move to the nursing home.  When reviewing your application for Medicaid nursing home care, Medicaid looks not only at your current financial situation, but also at your situation over the past five years.  This is known as the five-year look back rule.

Medicaid can deny your application if it determines that you have been intentionally alienating assets in order to qualify.  For example, sizable cash gifts to family members might still set off red flags with Medicaid, even if they are within the limits of the annual gift tax exclusion.  The same applies if you sell valuable assets at a loss.

One solution to this problem is to start spending down your assets more than five years before you begin to require nursing home care.  This means that you should start now, since it is impossible to know how long your good health will stick around.  Meet with an estate planning lawyer for up-to-date details about Medicaid eligibility and to build and implement a plan so that you can qualify.  If you can afford this, a simpler solution is to buy long-term care insurance.  The younger and healthier you are when you buy a long-term care insurance policy, the less it will cost.

Contact Gierach and Gierach About Qualifying for Medicaid Nursing Home Care

Medicaid eligibility requires you to play the long game.  An estate planning lawyer can help you start planning to become eligible for Medicaid nursing home care long before you need Medicaid or nursing home care.  Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.




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