Ideally, Medicaid planning should start years before you anticipate needing long-term care. The application process can be strict, and you can face penalties for violating the look-back period.
As a business owner, this significant period is one of the threats to your extensive portfolio and estate. Without the proper approach, your hard-earned legacy can turn into a series of costly consequences.
Understanding the Medicaid look-back period
Medicaid uses the five-year look-back period to ensure you did not gift or sell assets less than fair market value to meet the required asset limit before applying. These can include transferring property to your child’s name, creating an irrevocable trust during the look-back period and funding others’ expenses.
The Department of Medical Assistance Services (DMAS) uses your application date as the starting point for reviewing all transactions you made for the last 60 months.
Outlining the consequences of a Medicaid violation
In Virginia, the DMAS calculates your penalty period by using a daily divisor that reflects the average cost of nursing care. Depending on the value of the transfer, you can be ineligible for Medicaid coverage for months or years.
During this penalty period, you pay your nursing or home care out of pocket. For a complex portfolio, these costs can quickly reach hundreds of thousands of dollars.
Planning early instead of regretting later
The most effective way to shield your legacy is to start your Medicaid planning early. By restructuring your assets now, you do not have to worry about violations during the look-back period. A late start risks the forced liquidation of your assets at a loss, which could devastate your estate and your family’s future.
Navigating Medicaid regulations in Virginia requires precision. Consulting with an attorney and Medicaid planner can offer guidance.