Medicaid can pay for long term in a nursing home, assisted living facility, or at home with aides, but with long term care costing thousands of dollars each month, long term care could easily wipe out your life savings unless you plan effectively.  In  “What-should-you do-now-to-protect-against-nursing-home-costs?” [April 26, 2017 SpecialNeedsNJ.com/blog] Mark Friedman discusses Medicaid and other long term care planning tools  This article focuses on how to get New Jersey Medicaid or New York Medicaid to pay nursing home, assisted living, or in home aide long term care costs– particularly in crisis situations.

So what should you do if a spouse or parent has a stroke or contracts dementia?  The first thing to consider is engaging an elder law attorney.  Do it yourself Medicaid planning is hard because Medicaid is governed by complex rules that often defy common sense.  A mistake that delays Medicaid eligibility for as little as one month can cost you over $10,000!

Clearly trying to qualify for Medicaid without consulting an elder law attorney is risky.  What about the friendly Medicaid planning firm recommended by dad’s nursing home?  Well, the longer dad stays off Medicaid, the more the nursing home earns because Medicaid pays only a fraction of private pay long term care costs.  Therefore, a firm chosen by the nursing home may not be eager to qualify dad for Medicaid while he still has assets left.

So what are some Medicaid planning options?  To qualify for Medicaid, you must have limited  finances and pass a Medicaid care screening (which NJ Medicaid calls a PAS).  Depending on where you receive care, you may have t0 take steps to obtain the PAS.  At FriedmanLaw, elder law attorneys employ various techniques such as gifts, purchases, and home improvements to qualify clients for Medicaid to fund long term care– often protecting substantial savings.

While Medicaid may impose penalties for some gifts made during the five year lookback period, it hardly ever is too late to benefit from Medicaid planning.  Some gifts are exempt and even non-exempt gifts can yield savings (sometimes very large savings) in the right situations. We also may suggest coupling gifts with annuities to save large amounts.  However, planning must take account of complicated Medicaid laws and regulations.  Gifting too much or too little or applying for Medicaid too soon can be very costly.

While most gifts (whether or not taxable) during the lookback period trigger a penalty period that delays Medicaid eligibility, some gifts for a spouse or disabled person and some gifts of a home are exempt– provided the gift meets various technicalities.  For instance, a caregiver child gift can protect mom’s home but only if it meets stringent Medicaid requirements.  Starting the  Medicaid gift penalty period at the right time can save a lot.  For instance,  $150,000 gift to grandchildren in January 2017 would trigger a roughly 15 month penalty period but the 15  months won’t even start until much later unless the gift is designed to accelerate the penalty start date.

Sometimes we help clients protect assets by funding long term care in a nursing home, assisted living facility, or at home without incurring a Medicaid penalty period.  This may involve gifts to or in trust for a disabled child, spousal annuities, prepaid funeral accounts or other techniques.  Yet savings won’t occur unless these techniques follow Medicaid law, which can be tricky.  Finally, unless wills and powers of attorney are coordinated with Medicaid planning, savings may never arise.  Therefore, like other elder law attorneys, FriedmanLaw strongly advises against do it yourself Medicaid planning especially since technicalities and exceptions apply to all the planning techniques discussed in this post.