There is a lot of information floating around out there regarding Medicaid and long term care. People write books and articles about “Medicaid secrets” and protecting against nursing home costs. Information is a good thing, but sometimes people who act on limited information make big mistakes.
We occasionally see clients who have tried to do their own Medicaid planning. They have made large gifts to their children or put their house into a sibling’s name. Problem is, in doing their own planning they’ve often lost opportunities to save much more with professional planning, and sometimes have made things much worse. Medicaid has a 60-month “look back” period, so gifts made within five years of the application can incur a hefty penalty unless they meet certain exceptions. People who are in a nursing home who make gifts without proper planning could end up with Medicaid refusing to pay the bill and no other money available to pay. In that situation, nursing homes may be able to go after family members for unpaid bills.
You can read a book about how the heart works, but you (hopefully) wouldn’t try to do heart surgery afterwards. Medicaid planning can be the legal and financial equivalent of heart surgery – it can be just as complex and important. To do Medicaid planning right, you should understand complicated federal and state laws and regulations (e.g.), and that understanding can’t be gleaned by reading a newspaper article or listening to what a friend tells you.
Nursing homes in New Jersey typically cost $10,000 or more, so the costs quickly add up for mistakes or missed opportunities that delay Medicaid eligibility. With the stakes that high, doing your own Medicaid planning is penny wise and pound foolish.