In this Elder Law Minute, Paige Fox explains the key differences between Medicaid pre-planning and emergency planning for long-term care.
Video Transcription:
Hi. My name is Paige Fox. I’m a Senior Associate Attorney here at Dent Coulson Elder Law. And I understand these topics are very complex, so I’m hoping these Elder Law Minutes can bring some insight and some more understanding to both potential clients and current clients. Thank you.
I believe that there are two types of main Medicaid planning: the first one being pre-planning, and the second one being emergency planning or planning at the time that an individual is in or going to be in a long-term care facility in the very near future.
I would say 90% of the situations I come across involve Medicaid emergency or current planning because the pre-planning is required to be five years outside of the Medicaid window. When you apply for Medicaid for long-term care, the State of Illinois will look back five years from the date of the application, and they will look at all asset transfers, all gifts, anything you’ve done with your finances or assets over the last five years.
So, if we were to apply for Medicaid on March 1st of 2025, you are looking to March 1st of 2020 as the starting point where the State of Illinois will look through your assets and decide, “Were there any transfers that were nonexempt or any gifts that were made that will impact your eligibility?”
So where the pre-planning comes in is, again, that it is outside of that five-year window. And types of pre-planning include things like irrevocable trusts, and gifts potentially or asset transfers. However, if there’s anything like that done within the five-year period, those will impact your eligibility for Medicaid. And that’s why it’s important to make sure that that is considered—things like pre-planning—so that you do not impact your Medicaid eligibility should you need long-term care in the next five years.
The most common type of Medicaid planning that I come across, like I mentioned, is the current or emergency planning. And that is a situation where, if the individual is not already in a long-term care facility, they are very well going to be in the facility within the next few months or even years.
That means that all planning that we have to do requires that you have to make sure to cover any penalties that can come up within that five-year period.
For example, if you were to do an irrevocable trust and then you transfer an asset into that irrevocable trust, in the eyes of the State of Illinois, that asset is no longer considered yours. And therefore, it is a nonexempt transfer because you transferred it outside of your possession for the purposes, essentially, of applying for Medicaid. If you do that—if you make a transfer into an irrevocable trust within the five-year period—the State of Illinois will penalize you for that transfer.
For example, they’ll say you’re approved for Medicaid, subject to a penalty for the amount of money or value that you transferred to the irrevocable trust.
If you are looking to do Medicaid planning within the next five years, or if someone that—someone that you know—is in a long-term care facility already and they are starting to see their assets really dwindle down, then it’s important to look into the emergency Medicaid planning or the then Medicaid planning.
And there are various types of asset preservation techniques that we can do, even within the five-year period. However, it’s extremely important to make sure that you do those transfers correctly and within the Medicaid policies and rules. Otherwise, again, it’s going to jeopardize your ability to get Medicaid in the future—whether it’s in, you know, two months or two years—so long as it’s in that five-year period.
So again, if you or anyone you know is looking to do Medicaid planning, whether it is pre-planning or current/emergency planning, feel free to reach out to Dent Coulson Elder Law, and we’re happy to assist.
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Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.
