The need for long-term care is real. A significant portion of the population will need some sort of long-term care at some point in their lives, which brings with it exorbitant costs. How are you going to pay those expenses if they arise? Are you simply going to turn to your savings? A long-term care insurance policy? Maybe, but if you don’t have the resources needed to cover your long-term care costs, then you have to find another option.
One possibility is to rely on Medicaid to cover your expenses. This can be an effective strategy, but it requires you to reduce your assets and your income to a certain level that allows you to qualify for this governmental assistance. And, as you navigate the process, several errors can be made that could jeopardize your ability to cover your future costs.
Errors to avoid in the Medicaid planning process
Looking at the big picture, you want to reduce your income and assets to meet Medicaid eligibility. That might sound simple enough, but the five-year lookback period and other stringent requirements create a lot if areas where you can get tripped up, make a mistake, and be left facing costs that you can’t cover. Here are some of the biggest errors that you’ll want to avoid:
- Submitting a Medicaid application before you’re ready: As soon as you submit your Medicaid application, you might obligate yourself to utilize certain assets to pay for your long-term care costs. You don’t want that to happen, as you won’t be able to back out of that situation and refocus on protecting your assets. So, be thoughtful about when you apply, and avoid the urge to submit your application just to see what happens.
- Submitting an application at the wrong time: Timing is everything with a Medicaid application. If you submit too early, then you might be penalized for transactions made during the lookback period. If you submit too late, then you’re probably going to have to use a significant amount of your assets to cover your expenses.
- Not understanding the lookback period: The Medicaid lookback period can be confusing, and it requires a lot of foresight to successfully navigate it. So, if you’re unfamiliar with the process, then you’re bound to make a mistake that will put your estate’s assets at risk.
- Relying on a living trust: Some people think that a living trust will shield their assets from long-term care costs, but this isn’t the case. This type of trust is revocable, meaning that you retain access to the trust’s principal. As a result, without further planning, the government is going to expect that you’ll use those assets to pay for your long-term care.
- Hiding assets: Hiding assets for the purpose of qualifying for Medicaid is fraud. This can result in criminal charges being levied against you, let alone prevent you from qualifying for the resources that you need. With that in mind, you should be open and honest during the Medicaid application process and rely on the planning process to get you where you want to be.
Don’t put yourself at a disadvantage during the Medicaid planning process
There’s a lot that goes into successful Medicaid planning. You don’t want to make the process harder by being your own worst enemy. That’s why now is the time to learn about what you can do to effectively reduce your assets so that you qualify for Medicaid benefits fair and square. To get started, please consider reading the rest of our website and our blog posts on Medicaid planning.