Medicaid planning can be an extremely useful tool for seniors who may be faced with the need for nursing home care. Nearly 70% of elders will need long term care at some point in their lives. Additionally, they will need care for an average of 3 months. Now I think it’s safe to say that we, the general public, don’t have the education or the resources to properly apply and qualify for Medicaid.

Planning for Medicaid is an extremely complicated process and you will need an attorney to assist you, there's no way around it. With over 72 million Americans in debt from medical expenses, Medicaid planning is in high demand and trust me you don’t want to wait until it’s too late.

The purpose of this article is to educate you on the in’s and out’s of the Medicaid process while informing you of some tips and tricks that not everyone knows or even uses.

First, it’s important to understand what are Medicaid strategies - what do they entail and how do you create one?

While Medicare is a great federal healthcare offering coverage for a lost cost every month, it does have its disadvantages. Medicare, unfortunately, doesn’t cover any type of long term care including assisted living and nursing homes. It also has a high out-of-pocket cost.

Medicaid is the prettier, more liked cousin of Medicare. Medicaid offers a broad level of health insurance coverage including doctor visits, hospital expenses and assistance to customers with long term care such as nursing homes.

However, there are many qualifications you have to meet or your application will likely be denied. You can only own a small amount of property and money, plus have a low yearly income to qualify. In many states, you have to have 2,000 dollars or less in assets and this can create problems for elders.

Seniors often save their money either out of pure habit or with the intention to leave an inheritance behind for their families. This is prohibited by Medicaid obviously because they want you to use your own money before they go around handing out government funds. Medicaid planning strategies allow you to “rearrange” your assets so you qualify for various Medicaid benefits. The ultimate goal of Medicaid planning is to have an attorney shelter your countable assets from being completely wiped out by nursing home care. This way you don’t spend all the savings you spent a lifetime building in a matter of months.

To help you better navigate the qualifications and restrictions of Medicaid, we will discuss two overlooked tips and tricks you should know when considering this type of health care. These types of trusts are highly complex, you should have an experienced elder care attorney guide you through the process and advise exactly on which assets should be placed into the trust.

When Should I Start Medicaid Planning?

I’m sure throughout your lifetime you’ve heard the saying “ the sooner the better”, contrary to popular belief, this applies here perfectly. It is NEVER too early to protect yourself. Medicaid planning strategies should start as soon as you have amassed assets of value that you want to ensure are protected as time progresses. In general, the goal is to ensure certain assets are not counted in determining whether you can qualify for Medicaid. One of the most popular options for people who want to plan ahead is to create a trust and transfer the ownership of the assets they wish to protect into that trust.

The process of developing and carrying out a plan is not something that can wait until you actually need nursing home care because then it will be too late to get protection for the assets. There is a five-year look-back rule in most states which is intended to ensure people don’t just give away their assets and possessions in an effort to qualify for Medicaid.

When you apply for such benefits, a review is made that consists of transactions from the past five years. If they find you transferred ownership of the assets, you will experience a penalty period, followed by immediate disqualification. If you have not started the process of Medicaid planning early, you stand to lose more than you would if you had a plan in place as soon as you acquired a lot of assets. However, if you didn’t plan at least five years prior there are still other ways you can bypass some of the qualifications.

Certain Assets Don’t Count With Medicaid

Even if you don't want to put your assets into a trust just yet, there are certain routes you can take to bypass the asset qualifications. Certain assets are exempt from being counted as money and estate by Medicaid. You can have one car regardless of value (within reasonable limits) and a second car that is seven years old or older.

Have you been waiting to make some home improvements? This is the perfect opportunity to bury some of your assets during the process of applying. You can conduct home improvements of any amount. Get that new kitchen you’ve been waiting for or a pool installed for the kids. Although this is typically for installing wheelchair ramps and things of that nature there are currently no restrictions in place.

You can also prepay for funerals. Even if it’s undesirable to think about you know you’re going to spend the money on funerals eventually for you and your loved ones. You can buy irrevocable pre-paid funerals for your entire family. Lastly, Medicaid can't touch any assets that produce a source of income. A non-homestead property that is rented out will not be counted as an asset, however, the income will be counted.

I know this process can seem rather intimidating and confusing but it’s always important to act sooner rather than later. Let an experienced professional guide you through the complicated process and help you make financially sound decisions. You will thank yourself in the future for securing your money and property.