Medicaid is a needs-based health insurance program. Individuals with income below a certain level and without significant assets can turn to Medicaid to cover their costs for health care and medical treatment.
Although all retired adults can potentially qualify for Medicare, not all of them can qualify for Medicaid. That leaves many retired Americans at risk of not having coverage for nursing home care when they get older.
Medicaid planning is a process that people often complete while estate planning or retirement planning. It involves the strategic diminishing of your assets or changing the way that you hold your property so that you can qualify for Medicaid. When should you start Medicaid planning?
You don’t want to wait until you need the benefits
There is no perfect answer about the right age to start Medicaid planning, but planning sooner is almost always better than waiting until you need benefits. Applicants are subject to financial scrutiny that goes back over five years of their records. Transfers and gifts made during the 60 months prior to a Medicaid application can invoke the Medicaid penalty.
Essentially, the amount transferred or gifted will get converted into a number of months of care. Applicants will have to pay for that care through their own resources or by taking on debt until they complete the penalty period. It is far better to begin Medicaid planning more than five years before you apply so that the penalty won’t be a concern for you.
You never know when your health might turn
The vast majority of people in nursing homes are over the age of 65, and an even higher percentage are over the age of 85. However, even younger people could wind up in nursing home facilities if they suffered catastrophic injuries or medical events like strokes. Most people should assume that they could need Medicaid coverage within the first 10 years of their retirement, if not earlier to best protect themselves.
At the very latest, it is generally advisable for people to start planning to qualify for Medicaid at least five years before they intend to retire. Those who did not plan ahead or those with parents who did not plan ahead may still have options available to them, so a careful review of financial circumstances and program requirements could help.