How far ahead do you need to plan for Medicaid?
Getting Medicaid benefits can be a challenge. Texas has strict income limitations and even rules about the value of someone’s assets, excluding their primary residence.
Someone who needs Medicaid is subject to careful scrutiny of their previous financial transactions. As such, planning far ahead of time is the best approach for adults who may eventually require Medicaid benefits.
When will you need to plan if you want to avoid triggering a penalty when you apply for Medicaid?
The state looks back over many months of records
When you apply for Medicaid, you will have to provide financial information and consent to a thorough review of your recent financial history. The Medicaid lookback period in Texas is a full 60 months or five years. Financial transactions that occur during the lookback period could potentially trigger a significant penalty for the applicant.
Any major gifts or transfers during those 60 months will likely trigger a penalty. You may have to make an equivalent amount of personal contributions toward your care before Medicaid will start covering your costs.
Obviously, someone already struggling to pay for their medical care won’t be able to delay applying for Medicaid by 5 years just to protect some of their assets. It’s crucial that those beginning to prepare for retirement look over their finances carefully. If they can’t reasonably expect to cover all of their medical expenses or nursing home costs, Medicaid planning may be as important as estate planning for those nearing retirement.
Planning well ahead long before you might need Medicaid benefits will reduce the likelihood of a penalty affecting the coverage you eventually receive.