Medicaid will pay for your aging parent or elderly loved one’s care – in many situations – when their money’s gone. However, one issue that causes problems when people need Medicaid is the five year lookback and gift penalties.
During the five year Medicaid lookback, Medicaid looks to see if your loved one gave money away. Did they cost themselves the ability to pay for their own long term care? Did they accelerate their need for Medicaid by giving money away?
Even if everything your loved one did during the five year lookback was legal, moral and ethical – and in most situations giving money away is all three of those things – Medicaid may (and probably will) assess penalties if your loved one made gifts during the lookback. This catches people off guard. They ask, “How can Medicaid penalize something that wasn’t wrong?” While it may not have been wrong, Medicaid doesn’t want to pay for care that – but for the gifts – you could have paid for yourself.
Medicaid changes the rules. They review the five years preceding the Medicaid application. You can’t change some things. You may have big problems if there were gifts and the money’s gone. Therefore, if your loved one might need Medicaid at some point in the future (or if you aren’t sure that they will or won’t) then the best step to take is to start working with an elder law attorney now – in advance of the situation. That way you can plan your loved one’s long term care expenses and work to prevent any Medicaid problems associated with the five year look back and gift penalties. There could also be an added bonus. You might not have to spend all of the money on care. Discuss that possibility with the elder law attorney.
Be careful, be smart and remember that the rules might change.