Most people are familiar with the government healthcare program commonly called “institutional Medicaid” that pays for nursing home care for people who are poor, with poverty being defined by federal and Ohio law.
Although there are numerous requirements to be eligible for institutional Medicaid, the most challenging requirements are usually that the applicant must have a financial net worth of less than $2,000, and the applicant must not have given anything away in the immediately preceding five years to become that poor.
The conundrum of institutional Medicaid is demonstrative of our society’s challenges as a whole. We want people to work, gain wealth and help the economy. However, the more successful, ambitious and thrifty we are, the tougher it is to get benefits such as Medicaid.
This column is not a treatise on the problems of conflicting incentives in our free market economy. Instead, this column is intended to explain the application of the five-year lookback rule and how it may be properly applied toward becoming Medicaid-eligible.
It is crucial to understand that the five-year lookback is measured from the date of application for Medicaid, not the date of admission to a nursing home. Therefore, even if someone is already in a long-term care facility such as a nursing home or is receiving long-term medical care at home, ownership or control of assets may still be able to be transferred to someone else at that time to create Medicaid eligibility five years later.
Because the key date is the date of Medicaid application, applying for Medicaid too early can sometimes be problematic.
Some people misunderstand the five-year lookback to require complete impoverishment for the full five years preceding Medicaid application. Instead, in reality, a person can have money and spend that money to live, as long as the applicant for institutional Medicaid has less than $2,000 at the time of application for institutional Medicaid.
Many people obviously do not want to give up control or ownership of their assets until they are forced to do so. However, similarly obviously, those people do not know when they will “need” to do so, because they do not know if/when they may need long-term care.
In light of the five-year lookback rule, a person who wants to retain control as long as possible may have some tools to literally own and control everything they have until they know for a fact that they will need to make transfers (for example, when the person enters a long-term care facility).
The key is to have resources to couple with regular income to be able to pay for five years of care. If a person has those resources, either through a long-term care insurance policy or certain life insurance, the person may be able to wait until nursing home admission to transfer control or ownership of assets.
This rule, like all Medicaid rules, is tricky, complex and must be planned-for properly. The bottom line, though, is that planning too late does not necessarily mean that all is lost.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.