You may have heard that you should be planning ahead so that you can use Medicaid for long-term care. However, many people wait until it is too late to plan effectively. This type of planning is necessary, but difficult to fully understand and appreciate until you need it—which is likely part of the reason it is overlooked or forgotten.
The reality is that it is difficult to determine or predict when you will need to use Medicaid, making planning that much harder. As a result, they need to switch to “crisis” planning instead of using a more proactive, long-term planning approach. The processes are very different, and knowing those differences is critical to using Medicaid effectively.
The Overall Goal of Medicaid Planning
Regardless of what type of planning you use, the overarching goal is to protect your assets and use this federal aid program to its full potential. To qualify for Medicaid, your assets must be sufficiently low to fall below levels set by rule and statute. How you reach this asset level will be determined by how much time you have to plan.
The Differences Between Long-Term and Crisis Planning
- Pairing Medicaid Planning with Estate Planning
Many people frequently consider Medicaid planning and estate planning at the same time, and may even transfer assets that would be part of their estate to their loved ones early or into one or more trusts as part of this process. Your spouse is often far better off if you have time to plan over the long-term as well. You can even create trusts that cover you both at the same time.
- Thinking Through Your Options
Because you have the time, you can develop trusts that are uniquely tailored to you, your family, and your financial situation. You simply have more control over the process when you have time to think through your options and weigh the pros and cons of each part of the planning process.
- Incorporating Other Planning Tools
You also have the benefit of considering things like long-term care insurance and other similar planning vehicles. While these tools may not be necessary for everyone, you at least have time to think about whether they will work well for your situation if you have the benefit of long-term planning.
- Avoiding a Spend Down
If the need for Medicaid is sudden, you may not have time to plan as effectively as you would have with a long-term plan. You must act quickly to ensure that you qualify for Medicaid. Unfortunately, it can sometimes be to the detriment of your spouse and other heirs. You must “spend down” your assets very quickly to ensure that you qualify. In many situations, you simply lose those assets when you have used them up immediately—you may not have any control regarding who they go to or how they are used.
- Dealing with Medicaid Fraud
Crisis planning must be done very carefully so that Medicaid does not accuse you of moving assets in a fraudulent way. It is more likely that Medicaid will take a harder look at your asset movement if it happens close in time to the need for Medicaid. In some cases, it can mean that you will not qualify for benefits. One of the many benefits of long-term planning is that this issue can be avoided almost entirely.
Whether you are ready to start long-term planning, or you are in crisis mode, Elder Care Law Firm can help. Give our team a call to set up an appointment today.
