We have mentioned before that Medicaid is a means-based government program.
Many seniors and others throughout New Jersey rely on Medicaid to pay for their extended medical and nursing home care, but because Medicaid is means-based, they first have to show that they lack the income and resources to pay for the care themselves.
This puts many people in a bind since it means trading off the chance to pass down even modest wealth to their families for usually necessary medical care. However, legal Medicaid planning can help a person dispose of his or her wealth in the way they want and still qualify for Medicaid.
Planned gifting is one such planning technique. The idea is, instead of passing one’s wealth as an inheritance, a person disposes of it during his or her life.
However, a word of caution is in order in this respect.
Generally speaking, gifting needs to be done well before a person goes into a nursing home. The reason is that the laws impose what is commonly called a lookback period of 5 years.
If a person makes a gift in the 5 years before requesting Medicaid benefits, and ultimately qualifies for Medicaid, then the government will impose a penalty based on the value of the gifts given.
The higher the total value of all gifts in the lookback period, the more months the person will have to wait before Medicaid will pay claims, including claims for nursing home care. During this time, out-of-pocket may be the patient’s only option.
There are some exemptions to the Medicaid lookback period. An attorney skilled in Medicaid planning can help a New Jersey resident evaluate his or her options in this respect.