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When should older adults begin Medicaid planning?

On Behalf of | Apr 19, 2024 | Medicare/Medicaid

Many older adults who are preparing for retirement in Georgia expect Medicare to help them meet their needs. A lengthy work history or a marriage to a professional that lasted at least 10 years can make an older adult eligible for Medicare benefits after they reach retirement age.

Medicare helps cover basic healthcare costs after someone’s retirement. However, Medicare has numerous limitations. Some of the most important gaps in Medicare coverage include limits on long-term care. Those who need to move into a nursing home and those who spend months at rehabilitation facilities may not receive the support they expect from Medicare. People may need Medicaid to cover those costs, and qualifying for Medicaid often requires advance planning.

Planning years in advance offers enhanced protection

In theory, there are strategies to help people qualify for Medicaid after sudden medical emergencies. Many older adults with medical challenges and financial limits can get benefits with the right support after unexpected medical issues.

Unfortunately, last-minute planning can cause a couple of major issues. The first is the risk of a penalty. Medicaid looks back at five years of financial transactions, including gifts and transfers to trusts. If someone wants to avoid those penalties, they usually need to plan at least 60 months before they think they need benefits.

The second concern is the possibility of estate recovery efforts. Someone could qualify for benefits without a penalty if the only high-value asset in their name is their primary residence. However, their home could be vulnerable after they die. Estate recovery efforts can force the personal representative of an estate to allocate resources that someone earmarked for their family members and chosen beneficiaries to repay Medicaid for the medical costs someone incurred later in life.

If someone engages in Medicaid planning at least five years before they need benefits, they can drastically reduce the risk of a penalty, delayed benefit availability and recovery efforts after their death. Efforts to diminish personal holdings may need to begin long before someone’s health declines.

Careful Medicaid planning can set someone up for peace of mind as they age and can help them to preserve their legacy after they die. Understanding the rules that apply to long-term care Medicaid benefits can help people protect themselves and their loved ones when they are at their most financially vulnerable.