A common misconception is that the person who needs care should give away assets.
To prevent abuse of the Medicaid program, almost all states have established a five-year “look-back period” to determine eligibility. People who are found to have given away assets or sold them for less than market value during the five-year period preceding their Medicaid application will have an extended waiting period before they are eligible for coverage.
— NAELA President Jennifer VanderVeen
“The biggest mistake I see is people doing things like deeding their home to their children because someone at church told them that’s what they had to do to protect it. In fact, it creates a host of other problems, including tax liability for your children,” VanderVeen says.
“Medicaid is often of importance to middle-income Americans because Medicare does not cover the costs of long-term care for illnesses such as Alzheimer’s disease or paralysis caused by a stroke. Most people who need such care for extended periods will eventually deplete their assets and become unable to pay the costs of their care,” according to a brochure available online from the National Academy of Elder Law Attorneys (NAELA).