MEDICAID MYTH: I WAITED TOO LONG, I CAN’T PLAN ANYMORE

People think long term care is some else’s problem. They picture themselves passing away quietly in their sleep – in a calm, painless, and peaceful manner. But nursing homes and other long-term care facilities are filled, and new facilities are springing up on every corner. In the area surrounding my Wall Township office, that is, quite literally, true. There is a growing population of elderly individuals who currently need, or will need, long term care.

The question this article seeks to answer is this: When people discover that they misjudged the future, end up needing long term care, and have failed to plan for such care – is it too late for them to plan? Can they be helped?

Many people who find themselves in this unfortunate situation believe that it is too late. After all, you find yourself in a nursing home. The nursing home has asked you the nature and extent of your assets and income. The nursing home may have had you, or a family member, sign an agreement in which you agree not to apply for Medicaid until you have expended all of the assets you disclosed on your application for your care at the nursing home. The agreement may go on to indicate that you have to private pay for a certain period of time, perhaps two years. And, your family may have signed the agreement, guaranteeing the nursing home private payment for the two-year period of time, if you don’t pay.

So, isn’t that the end of planning. You’ve told them what you’re worth. You promised to use that money to pay for your care at the nursing home. Medicaid planning wouldn’t work for you, right? Wrong.

First of all, third-party guarantees of private payment and guarantees in which a resident agrees not to apply for Medicaid benefits for a period of time are unenforceable. A federal law, enacted in 1987, prevents nursing homes from asking a person to sign such an agreement. If the agreement is signed, it’s simply unenforceable, as a violation of federal law.

Secondly, it is rarely too late to begin planning. If you have spent all of your money on your care, and are now impoverished, then it’s too late; but if you still have assets in your possession, chances are, you still have planning opportunities.

Approximately 90% of my clients who are engaging in Medicaid planning come to see me after a family member has entered a nursing home. As I stated at the top of this article, people tend to avoid the subject of long term care, believe it will never happen to them, and fail to plan. While pre-planning may be advisable, the reality is, people don’t plan.

Planning properly, while paying for the care you are receiving, can preserve a significant amount of assets for your benefit and the benefit of your family.

People often ask me when they should start planning. For that question, there is no easy answer. There are a number of planning options available and not all of them involve Medicaid. For example, a healthy person would be advised to explore long term care insurance options. Someone who suffers from Alzheimer’s or Parkinson’s disease may have no choice but to plan for Medicaid. As it says on many warning labels, “circumstances may vary,” so there is no easy answer to that question.

But whether or not it is too late for you to plan is an easy question to answer. If you have assets remaining in your name, it’s not too late.