5 Common Mistakes in Medicaid Crisis Planning in Maryland

Common Mistakes in Medicaid Crisis Planning in Maryland

You or your elderly parent suddenly needs long-term care, but your savings won’t last long and you’re unsure how to pay for it without draining your assets. This is where Medicaid crisis planning comes in—but beware, there are common mistakes in Medicaid crisis planning in Maryland that can derail your efforts.

Medicaid crisis planning is a critical process for families facing the immense costs of long-term care. It involves strategizing to protect assets and become eligible for Medicaid assistance as quickly as possible.

To help you navigate this challenging situation, we’ll discuss 5 common mistakes in Medicaid crisis planning in Maryland—and how to avoid them.

1. Assuming You Don’t Need a Medicaid Plan

Don’t fall into the trap of thinking that Medicaid planning isn’t for you—that it’s only for people living substantially below or above their needs. In reality, long-term care costs can quickly deplete even a sizable nest egg, leaving you and your family financially vulnerable.

The average cost of a semi-private room in a nursing home can exceed $90,000 per year. Even if you have sizeable retirement savings, a prolonged stay in a care facility can eat away at your assets.

By creating a Medicaid plan early, you may be able to protect your hard-earned assets and receive the care you need without becoming a financial burden to your loved ones.

Don’t wait until a crisis strikes to start thinking about Medicaid—by then, it may be too late to implement effective strategies without incurring penalties.

2. Waiting Too Long to Make a Plan

One of the most common mistakes in Medicaid crisis planning in Maryland is waiting too long to create a strategy. Procrastination can limit your options and expose you to unnecessary risks.

Sudden health changes—like a stroke, fall, or heart attack—can happen at any time, leaving you in immediate need of long-term care. Without a Medicaid plan in place, you may have to pay out of pocket.

The Look-Back Period

Timing is crucial in Medicaid planning due to the five-year look-back period. During this period, Medicaid examines your financial transactions to make sure you haven’t given away assets or sold them under fair market value to qualify for coverage. If they find any such transfers, you may face a penalty period of ineligibility.

If you wait until a crisis strikes to begin planning, you’ll have fewer legal strategies available to protect your assets and achieve Medicaid eligibility fast. This can result in prolonged private pay periods, which can be financially devastating.

3. Transferring Assets Within the Look-Back Period

During the five-year look-back period, Medicaid scrutinizes all your financial transactions, including gifts and asset transfers.

Many people mistakenly believe they can simply transfer their assets to family members or put them in a trust to become eligible for Medicaid. However, if these transfers occur within the look-back period, they can trigger prolonged periods of ineligibility.

Examples of Transactions That Violate the Medicaid Look-Back Period:

  • Giving a large cash gift to a family member
  • Selling a house to a relative for less than fair market value
  • Transferring ownership of a vehicle to a friend without proper compensation
  • Adding an adult child’s name to a bank account or property deed
  • Creating and funding a trust with a significant portion of your assets

Generally speaking, any transfer of assets for less than fair market value during the look-back period can be subject to penalties.

Using the wrong legal tools can be just as detrimental as not having a plan at all. It’s easy to get caught up in the complexity of various legal instruments—such as trusts, annuities, and life estates—without fully understanding how they work or impact Medicaid eligibility.

For instance, some individuals might create a Medicaid Asset Protection Trust (MAPT) to protect their assets, but if they do so within the look-back period, it can trigger penalties.

Others might purchase an annuity without realizing that certain types of annuities are considered ‘countable assets’ that can disqualify them from Medicaid.

To avoid these common mistakes in Medicaid crisis planning in Maryland, it’s essential to seek professional advice from an experienced elder law attorney. They can help you navigate the intricate web of legal tools and create a customized strategy that best fit your unique situation and goals.

5. Trying to Create a Medicaid Plan on Your Own

One of the most common mistakes in Medicaid crisis planning in Maryland is trying to create a plan on your own. While the DIY approach may seem like it saves money, the complexity of Medicaid rules and the high stakes involved make it risky.

Medicaid regulations are constantly evolving, making it difficult for the average person to stay informed and compliant. Even a small mistake or oversight in your Medicaid application can lead to denied coverage.

The strategies used to protect assets and achieve Medicaid eligibility require a deep understanding of legal and financial tools—like trusts, annuities, and spousal protections. Attempting to navigate these tools without proper guidance can result in unintended consequences and jeopardize your entire plan.

To avoid costly errors and ensure a comprehensive Medicaid plan, it’s essential to consult with an experienced Medicaid planning attorney. They can help you understand your options, create a tailored strategy based on your unique circumstances, and guide you through the application process.

Key Takeaways

  • Medicaid crisis planning is essential for anyone facing long-term care costs, regardless of wealth or demographics.
  • Don’t wait until a health crisis strikes to start planning for Medicaid eligibility.
  • Be aware of the five-year look-back period and avoid transferring assets improperly during this time.
  • Use the proper legal tools and strategies to protect your assets and achieve Medicaid eligibility.
  • Don’t attempt to create a Medicaid plan on your own; the complexity of rules and regulations can lead to costly mistakes.
  • Speak to an elder law attorney to develop a comprehensive, compliant Medicaid plan tailored to your unique situation.

Don’t Wait—Start Medicaid Planning With PathFinder Law Group Today

No one expects the worst to happen. But when it does, and you need Medicaid crisis planning, it’s vital to have an experienced attorney by your side. And the sooner you start planning, the more options you’ll have to protect your assets and secure the care you need for yourself or your loved ones. Request a risk-free consultation with PathFinder Law Group today and take control of your future or call us at 443-579-4529.

About Adam Zimmerman

Adam Zimmerman is known for his unique ability to put people at ease. Within minutes of meeting Adam, his clients realize he is not the stereotypical attorney and is genuinely invested in helping them through their life situations. He is committed to empowering his clients to be decision makers in the process, so they are knowledgeable about the course of action they decide over their affairs.