An important aspect of estate planning in North Carolina is Medicaid planning. The costs of Medicaid can eat away at a family's or individual's income and savings, especially as care can cost anywhere from $5,000 to $10,000 per month. Particular income, asset, and medical requirement tests must be met by any individual seeking to qualify for Medicaid, and often applicants find themselves deemed as ineligible under state and federal law because of being given "gifts" in the past that fell within what is known as "the look back period." These "gifts" are considered excess assets, but there is a way to reduce your countable assets in order to increase your chances of qualifying for North Carolina Medicaid. Planning to place monies and property into other holdings such as living trusts, or transferring ownership to other family members is a common way to go. This must be done quite some time in advance, yet it is a crucial step towards profitable North Carolina Medicaid Planning.
Our Tips for North Carolina Medicaid Planning
There have been recent alterations to the laws governing Medicaid, particularly those of the Deficit Reduction Act. This became law in 2006, and incorporated a five year long "look back" period regarding a person's or a trust's receipt of financial "gifts". Because the look-back period is five years, it has been wrongly assumed that the Medicaid penalty period is also of five years duration; however that is not the case. The length of the waiting or penalty period is determined by the amount transferred into the trust during that five year look-back period. When North Carolina Medicaid planning options are considered, many people confuse the look-back and penalty periods, a mistake that could be costly. The government is only interested in gifts that were given during the five years of the look-back, a period which begins immediately prior to any application for benefits. Only gifts given during those five years are factored into any penalties levied on benefits.
The size of any penalties levied is dependant on the laws of each individual state. In North Carolina, Medicaid planning should include a one month penalty for any five thousand dollars gifted during the look-back. Any gifts that were received during the five years prior to the look-back period are added together, and then divided by $5,000. This then gives you the length of your waiting period for benefits. For instance, if you gifted $100,000 to a trust, that creates a 20 month penalty or period of ineligibility. If you apply for benefits before the expiration of the look-back period, your penalty will commence when:
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- You apply for Nursing Home Benefits
- Have assets valued at below the amount allowed ($2,000 for singles, for married people)
- You are in a Nursing Home
Unfortunately, regarding North Carolina Medicaid, planning must include consideration of the fact that you may find yourself broke or homeless, and still not qualify for Medicaid benefits because of past gifts received. Make sure that when planning for Medicaid; you get good legal advice, and plan very carefully. Gifts can still be made, but they should be given under the guidance of an expert.
It is best to commence your North Carolina Medicaid planning strategies five years before a nursing home will be needed. This careful consideration will help you to protect your family and your assets, while ensuring that you qualify for Medicaid, and avoid penalties for gifts received. Consult with an attorney who specializes in North Carolina Medicaid planning strategies, and ensure you get the care you deserve, while not placing your family under undue financial strain.