I meet a lot of procrastinators. People who wait too long to deal with a serious issue, then figure they can fix it just by coming to an attorney. The best example is Medicaid Planning: Maybe a person wants to preserve their assets, but does not want to give up control and does not trust their children to have control. Or he wants to see what the future holds and then…and…and…..
…And then “the event” that finally requires wealth preservation happens and no steps have been taken. The client has held onto their assets for too long and then has a stroke, or quick onset of dementia, maybe Parkinson’s develops, and the client is now in a rush to become Medicaid-eligible. Then, when I explain Medicaid restrictions, the person says “But wait, I pay my taxes, I am entitled to Medicaid… I hate the government because they take my money and provide nothing in return.”
First, you did NOT actually pay for Medicaid directly. While you did pay for your Social Security and Medicare separately out of your paycheck (as did your employer – remember to thank them for that), your general income tax dollars pay for Medicaid. The money that goes to military expenditures, building roads, and Big Digs / Highways to Nowhere are the same funds that pay for Medicaid. You have the same taxpayer’s right to Medicaid as you do telling the government you demand an express flight to Hawaii on a B-2 Bomber which, granted, sounds absolutely awesome but is probably not going to happen.
Next, you are NOT entitled to Medicaid: Medicaid is a needs-based program, meaning you can only have a limited amount of assets and income, and must have an actual physical or mental need in order to qualify. You also need to transfer funds at least 5 years before your use of nursing home benefits. And while you only need a 3 month “look back” asset transfer period for home care, you are also not entitled to 24 hour home care attendants. Think about how much money it would cost to have a person on staff this many hours a day every day for 15 years…it’s just not financially feasible.
Lastly, the government itself does not always “take” your money. Typically a nursing home accepts your money first, until your assets are drained to needs-based levels, then the government begins paying them for Medicaid. If you come into a windfall of assets, such as an inheritance, the government will likely place a lien on these assets and bumps you off of Medicaid. Also take a moment to remember that you are NOT, in fact, a financially needy person: Evidenced by the fact that you are meeting with an attorney to transfer your money to other people so the government can pay for help you could otherwise afford yourself.
Don’t get me wrong: I want clients to get all of the financial and physical help they can legally attain. I want inter-generational wealth, I want to inform the public that you don’t have to spend your last dollar before you qualify for Medicaid. But I also want to let you know that you are not entitled to Medicaid, that you need to plan early, that you need to give up control of your assets, and that you need realistic expectations when you are dealing with any government agency.
Q FOR YOU: Is it worth giving up control of your assets and possibly increase your own discomfort in order to preserve them for your children?