What are the common mistakes in Medicaid asset protection planning?
Improperly moving your assets. If you improperly move your assets it may qualify as a gift or uncompensated transfer, which if done within the last five years prior to application, you could be penalized for.
There are many ways one can make a mistake when dealing with Medicaid asset protection planning. There is a very complex system with some rules that must be followed, and failure to follow them could lead to the offender been penalized.
One of the mistakes that many people tend to make is the $15,000 per year gifting allowance. It is important to note that this is not a Medicaid rule but an IRS rule. In the Medicaid world, failure to comply with this rule will result in penalization for a full five years from obtaining any Medicaid coverage.
Another mistake many people make is their failure to pre-plan. Most people do not consider the possible need for long-term care at a time when they are still young and healthy.
However, pre-planning is the surest way to avoid the possibility of losing a lifetime of savings to the costs of long-term care. This is how it works; If you are young enough and can qualify, a long-term insurance plan should be considered and purchased.
Talking about common mistakes, people make in their dealings with us; the late application is a prevalent one. The timing of a Medicaid application is very crucial. If you intend your savings to be used for your long-term care needs, make a claim right away.