When to Begin Medicaid Planning

I have several prospective clients approach me to discuss Medicaid planning. They have typically just finished handling their own parent’s age-related issues (dementia, Parkinson’s Disease, etc.), and want their younger relatives to avoid the same kind of emotional turmoil and financial commitments when they age.

Medicaid compliance requires a person to relinquish either assets or control over those assets, but many people in their 60s are just not ready to part with either of these. A large percentage of these individuals are not even retired and have yet to enjoy the best years of their lives in which they have the physical, mental, and emotional capacity to enjoy their free time. In many cases, their knee-jerk response is based on the recent trauma they have endured caring for their own parents. A healthy individual or couple should not have to commit themselves to transferring assets for at least another decade. At most, they should place their real estate and certain businesses in a Medicaid-compliant trust and utilize non-retirement assets for their discretionary expenses (since retirement assets are excluded from Medicaid means testing).

On the other hand, this start-date should be earlier for an aging family member or a couple who has one partner diagnosed with a degenerative disease, such as early onset Alzheimers or Multiple Sclerosis. In this case Medicaid planning should be considered, and comprehension of the program should be gained immediately. Due to “look back” constraints on asset transfers, time is the greatest foe to successful family wealth preservation; and understanding available options is crucial for proper decision making.

Medicaid planning for a disabled minor child should commence prior to their attaining age 18, because courts grant guardianships more easily over people who have never had mental competency than those who have had it and lost it.  Benefits may be more easily procured under these circumstances.

Lastly, a single individual with no children should highly consider NOT pursuing Medicaid planning unless they feel it is imperative to preserve their family assets. Remember that while Medicaid does pay any additional health care costs that Medicare does not provide, the personal care Medicaid provides tends to be inferior to what out-of-pocket care providers can offer you. These people should wisely utilize their assets for their own benefit with the knowledge that Medicaid may be available once these assets are depleted.

Q FOR YOU: Has anyone shared with you their emotional hardships in dealing with a loved one’s aging issues?

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