Protecting Assets through Medicaid Planning

In a recent article, CNN estimated that the average cost of a nursing home is now over $80,000 a year. With costs so high, it is extremely common for elderly Americans to run out of assets and rely on Medicaid or Medi-Cal to pay for these fees. There are strict limits one must meet before qualifying for government nursing home coverage, however. Careful estate planning can help avoid problems in seeking government assistance with nursing home costs.

85 years
(Photo credit: jaded one)

Under Federal law, there is a 60 month “look back period” for Medicaid applications for nursing home expenses. California’s “look back period” is 30 months. This look back period means that the government will examine your financial history for this time, and determine whether you transferred assets for less than fair market value during this period.

The basic idea is to prevent people from giving away assets to their loved ones for the purpose of qualifying for Medicaid or Medi-Cal. As a result, it is important to transfer any major assets 60 months or more before you apply for Medicaid or 30 months or more before you apply for Medi-Cal. If this is not possible, a small number of exceptions exist, such as transferring certain assets to certain relatives.

If you do not comply with the look back period, the government may impose a penalty period, which prevents you from reapplying for Medicaid or Medi-Cal for a specified period. If you would like assistance with successful planning that avoids these potential pitfalls, feel free to call us at (626) 696-3145.

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