A common issue that is often overlooked in estate planning involves Medicaid eligibility. Though it is a needs-based program, it offers seniors a way to cover potential long-term care expenses without compromising their legacy.
The goal of estate planning is to preserve wealth and mitigate transfer risks. One way to achieve that is to incorporate provisions that help protect Medicaid planning eligibility. Below are a few Medicaid planning mistakes to avoid.
Providing erroneous information
It is important to review and update estate plans to protect Medicaid eligibility. Outdated power of attorney documents and estate plan provisions can result in a delay or denial of Medicaid planning benefits.
Violating gifting rules
To maintain eligibility, applicants must fully disclose all income and assets. Failure to do so violates Medicaid’s gift transfer rules and could lead to a disqualification period. Applicants who omit or are not honest about money or asset gifts made within the five-year lookback term could end up losing their eligibility for Medicaid or wait a certain length of time before Medicaid covers their long-term care expenses. The value of assets in violation of the lookback period determines the benefit deferment term.
Spousal death
There is the possibility of institutionalized spouses living longer than their partners (caregivers). Complications that impact Medicaid eligibility often arise when a surviving (institutionalized) spouse receives an inheritance from their deceased (caregiving) partner. They also can occur when the spouse that dies leaves behind assets without a will or estate plan.
A key aspect of estate planning is anticipating unforeseeable issues and creating a contingency plan to counter them. Mistakes made while creating an estate plan that does not have considerations for long-term care could lead to a forfeiture of Medicaid eligibility planning and property and assets.