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Medicaid look-back period and paying for nursing home care

Aging adults can serve their best interests by considering how they will pay for long-term care in a Michigan nursing home years before they may ever need it. Nursing homes cost thousands of dollars a month. At that rate, you will likely deplete the entirety of your financial resources to pay for housing and care. Having Medicaid pay the nursing home presents an alternative, but you must qualify for it by having little to no assets or income.

Difference between Medicare and Medicaid

Although everyone age 65 and over has access to medical benefits through Medicare, this federal government program only pays for some nursing home care under limited circumstances. Medicaid is the program funded by the federal government and operated at the state level that pays most bills for nursing home residents. Medicaid provides benefits only to people who are impoverished.

At one time, a person who needed to enter a nursing home would transfer assets to family members and therefore become impoverished on paper in order to qualify for Medicaid. In 2005, the laws changed and installed a five-year, look-back period. When you apply for benefits, Medicaid administrators now examine your asset transfers for the five previous years. Most transfers during that period could disqualify you for benefits and leave you personally responsible for nursing home bills.

Preparing for Medicaid eligibility

The new regulations force people to be proactive concerning their assets and income. Through the process of advance Medicaid planning, people choose strategies for shifting assets out of their names while preserving their current lifestyle.

In this way, you could lay the foundation for qualifying for Medicaid. An irrevocable trust or properly timed asset transfers offer workarounds that may preserve your estate for your heirs while maintaining access to government benefits.