In this insightful episode of Advice From Your Advocates Podcast, Attorney Bob Mannor is joined by Amy Persails, the planning services director at Mannor Law Group, who brings a wealth of experience and knowledge on the intricate workings of Medicare, Medicaid, and the subtle art and perils of strategic gifting. First, it’s important to note the differences between Medicare and Medicaid.
Medicare and Medicaid are often confused with one another, yet they are two distinct programs serving different purposes. Medicare is essentially a health insurance program taken out of your Social Security benefit, while Medicaid is a program aimed at assisting those who need help paying for care. The distinction between the two is critical in understanding the implications of how one manages assets, especially within the context of the 'look back' period.
The 'look back' period refers to the retrospective examination of a person's financial transactions in the past five years before applying for Medicaid. If it's discovered that the person has given away a substantial amount of money within this timeframe, they could face penalties. The goal of Medicaid planning is not to hide assets but to ensure the most efficient use of resources to meet care needs.
However, strategic gifting can sometimes play a role in Medicaid planning, particularly when timing is carefully considered. Surprisingly, even penalties can sometimes work to your financial advantage, but this requires careful calculation and precise timing. The process is highly intricate and the amount to gift needs to be calculated to a tee, emphasizing the importance of professional guidance in the process.
It's also essential to understand that gifting for Medicaid purposes is not the same as gifting for IRS or gift tax purposes. The latter involves a certain amount that can be gifted each year without attracting gift tax, while the former has no such exemption. Any amount gifted could potentially attract a penalty unless certain conditions are met.
This episode underscores the necessity of seeking guidance from a certified elder law attorney when navigating the labyrinth of Medicaid planning. The legal, financial, and care advocacy aspects of elder law are complex and intricate. The right guidance can ensure you take advantage of the benefits you are entitled to while avoiding unnecessary penalties.
Understanding the intricacies of Medicare and Medicaid, the 'look back' period and strategic gifting is critical for effective Medicaid planning. With expert guidance and careful planning, it's possible to navigate these complex systems successfully, ensuring the best possible care and financial stability.
Here are three quick tips to help you avoid Medicaid Gifting penalties:
Medicaid Gifting Tip #1 Don't give away any assets within five years of applying for Medicaid. This is known as the "look-back period." If you do give away assets during this time, you could be financially penalized. The penalty period is calculated based on the amount of assets you gave away and the average cost of nursing home care in Michigan.
Medicaid Gifting Tip #2 Keep detailed records of all asset transfers. This will help you prove to the Department of Health and Human Services that you made the transfers for legitimate reasons and that you are not trying to avoid the Medicaid gifting rules.
Medicaid Gifting Tip #3 Seek the advice of a certified elder law attorney. An elder law attorney can help you understand the Medicaid gifting rules and develop a plan to protect your assets and qualify for Medicaid without a penalty or sacrificing needed care.
If you are a Michigan resident who is concerned about how the rising costs of long term care could soon impact you or a loved one, it is critical to start planning as soon as possible. The team at Mannor Law Group is here to help you discuss your concerns and create a plan to protect what you’ve worked so hard throughout your life to save.
Call us today (800) 990-6030 and let’s start planning.
Listen to this episode of Advice From Your Advocates wherever you get your podcasts or watch now on YouTube.