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How Transferring Assets Can Impact Your Medicaid Eligibility in Kansas

Thinking about needing long-term care such as a nursing home or assisted living facility is never a pleasant thought. However, it is an important possibility to consider when planning how you will protect and preserve your assets and legacy for your beneficiaries in the future. Proactive Medicaid planning is an important topic to consider when planning for how you will pay for long-term care costs if the need for such care arises in the future. If you fail to properly plan for future Medicaid eligibility before you need it, you could miss out on the ability to use legal tools which help you maximize the amount of assets you are able to preserve.

Why you could need to qualify for Medicaid benefits in the future

Even if you think you will never need to receive Medicaid benefits, the odds of you needing long-term care of some type after you reach the age of 65 is quite large. Current research estimates 70% of everyone currently nearing the age of retirement will need some type of long-term care in the future. And the costs of such long-term care are on the rise – the average yearly cost for an assisted living facility in Kansas is about $35,000 and the average yearly cost for a semi-private nursing home is about $50,000. Unfortunately, these long-term care expenses are not covered by Medicare or by other private health insurance companies. Unless you have purchased and maintained a long-term care insurance policy, you and your family will either need to come up with the resources to cover the costs of long-term care yourselves or rely on Medicaid to assist with the costs of the care you need. Currently, more than half of all residents in a long-term care facility rely on Medicaid benefits to help cover their long-term care expenses. Without properly planning for the potential need for Medicaid benefits to cover long-term care expenses in the future, you risk the possibility of depleting your well-earned assets, retirement savings, and the legacy you will leave behind for your beneficiaries.

The five-year lookback rule for Medicaid eligibility

Understanding Medicaid’s five-year lookback period is important when discussing Medicaid planning because if you fail to proactively and properly plan for Medicaid less than 5 years prior to when you need to qualify to receive Medicaid benefits, then you will be limited in the legal tools available to properly preserve the maximum amount of your assets. Medicaid is a “needs based” program, meaning applicants must have a low-income and minimal countable assets in order to be eligible to receive benefits. Unfortunately, there are many seniors who are able to meet the low-income requirement but who have acquired too many valuable assets over the years to qualify for Medicaid benefits. What Medicaid found was happening too frequently was people were transferring too many of their assets right before they needed to apply to receive Medicaid benefits. So, Medicaid enacted a look-back period which requires your income, assets, and transfers made within the last five years be closely scrutinized. This mandatory five-year lookback rule prevents people from transferring or gifting away assets to relatives and friends right before they apply for Medicaid just so they can meet the asset limitation requirements. If Medicaid finds you have made any unauthorized transfer of assets for less than fair market value within the past five years, you will be subject to a temporary waiting period before you will be eligible to receive Medicaid benefits. The length of time your waiting period will be is calculated by dividing the value of your assets above the allowable limit by the average monthly cost of long-term care in your area. During this waiting period, you will be forced to use your own resources to cover the costs of your long-term care. The best way to avoid running into any issues with Medicaid’s lookback period is to incorporate specialized Medicaid planning into a comprehensive estate plan well before you need it.

The best time to prepare for unexpected medical costs is before you need them. While you may not believe you need Medicaid coverage today, no one knows what tomorrow holds. The compassionate Kansas Medicaid planning attorneys at Stockton & Stern, LLC. have the experience and legal savvy you need to navigate the complex Medicaid system. Contact us by phone to schedule an appointment at 913-856-2828 or contact us online today. We have offices conveniently located in Gardner and Overland Park, and work with individuals and families in all surrounding areas.