Medicaid is a financial and medical safety net for people with limited resources. People of all backgrounds may potentially require Medicaid when they have significant medical expenses that they cannot afford or cover with other types of health insurance.
Many older adults preparing for retirement create plans intended to help them qualify for Medicaid later in life. Some people make the mistake of assuming that planning isn’t necessary because they are eligible for Medicare benefits. They believe that any basic support needs they have should be eligible for Medicare coverage.
However, Medicaid is the only viable option for those who need long-term care support, such as a bed in a nursing home. The risks of not planning for Medicaid are serious enough to make Medicaid planning beneficial even for those who may never require Medicaid coverage.
What are the main risks people face if they do not plan?
Delays in coverage
When people apply for Medicaid benefits, the state does a thorough review of their financial history. Any transfers of assets for less than the fair market value of those resources and any sizable gifts made prior to applying can prevent people from qualifying. The state may impose a penalty by calculating the total value of the inappropriate gifts and transfers. From there, the state converts that figure into a number of months of medical support.
The older adult may then have to pay for their own care costs for that many months even though they no longer have the resources they previously transferred. That delay in coverage can keep people from securing space in a nursing home and can leave them very vulnerable when they likely need intensive support.
Estate recovery efforts
Older adults often take some comfort in the idea that their loved ones stand to inherit most of their high-value resources. Sadly, the state might diminish or entirely consume the legacy an older adult leaves if they require Medicaid. Certain assets, including a primary residence, do not prevent people from qualifying for Medicaid. However, those assets are vulnerable to recovery efforts after someone dies.
The New York Medicaid estate recovery program can bring claims against an estate in probate court. Such claims may force the sale of the decedent’s home and the liquidation of their other assets. In some cases, there may be no property left at all for their loved ones to inherit.
Advance planning for Medicaid helps people qualify for benefits quickly when they need support and allows them to preserve certain resources for their loved ones after their passing. Those preparing for retirement and/or concerned about health issues during their golden years may benefit from planning ahead to qualify for Medicaid in case they need benefits later.
