Timing is Everything with Long-Term Care Planning

Kimberly Butler Rainen

February 20, 2015

Approximately fifty percent of nursing home care in the United States is paid for by Medicaid. With the rising cost associated with nursing home care and longer life expectancy, this number is expected to increase. So the question arises not only how one should plan for the possibility of nursing home care, but also when should the planning be done?

Of course, when and if Medicaid planning is appropriate depends on the specific needs of each client, and will vary widely depending on wealth, how assets are owned, familial relationships, age and health.

It is important to know that Medicaid reviews transfers of assets made in the sixty month period immediately preceding the submission of an application for long-term care coverage. If assets are gratuitously transferred during that time, a period of ineligibility for coverage is imposed. The timing of any gifting or funding of a trust is an important part of the process. Period of coverage may be lost because planning was not done well enough in advance.

If the need for nursing home care is immediate and no planning was done in advance, it is also a costly mistake to believe that nothing can be done. If one spouse is remaining in the community (the “Community Spouse”), while the other spouse requires nursing home care, the Community Spouse may keep a certain amount of assets, some or all income, and often their home as well. In addition, there are certain expenses that can be paid in advance for the nursing home resident, which do not constitute a disqualifying transfer for Medicaid eligibility. Finally, certain exempt transfers of assets will not trigger a disqualification period for Medicaid eligibility.

Medicaid planning should be discussed in any estate planning conversation to determine whether or not it is an issue and when is right time for it to be addressed. Of course, if there are any changes with your family, your health or your financial situation, your estate plan should be reviewed at these times as well. If it is determined that Medicaid planning is not an immediate need, you should review your situation with an attorney every few years to determine whether an update is in order.