Author: Sarah Williams
Reviewed By: Kristi Bickmann
You can’t prepay for assisted living to qualify for Medicaid by lowering your assets or resources to meet eligibility criteria. However, you can prepay for assisted living to help you manage your budget, but you must apply for Medicaid or waiver programs later if you deplete your private funds and your financial situation changes.
Paying for assisted living in advance falls foul of Medicaid’s look-back period, which considers previous transactions completed over a set timeframe. Time limits vary between states. Such rules are specifically designed to stop individuals from giving away money to meet Medicaid’s financial eligibility criteria. If caught trying to cheat the system, you can be barred from claiming benefits for a period or have penalties imposed.
In most states, individuals must satisfy citizenship and local residency rules to qualify for Medicaid funding. Additionally, individuals must usually meet functional criteria and show that they need a certain level of care to live safely and independently. Some states require supporting evidence from an individual’s physician, and some complete health needs assessments on applicants.
Regarding financial qualifications, states impose strict income and asset caps, though actual limits vary depending on the location. Assets usually exclude an individual’s main home and one vehicle. Most Medicaid programs use Modified Adjusted Gross Income (MAGI) to determine eligibility, with the notable exception of individuals applying for Medicaid for the aged, blind and disabled. Additionally, seniors who receive Supplemental Security Income are exempt from Medicaid financial assessments.
Seniors who don’t qualify for Medicaid or receive partial aid that doesn’t cover bed and board costs must self-fund their care. Private pay is one option whereby individuals use their savings or income. Sometimes, family members help with expenses. A reverse mortgage may suit seniors who own their home, and those who served in the U.S. Armed Forces may qualify for VA Aid and Attendance benefits. Additionally, long-term care insurance policies usually cover some assisted living costs, or individuals may cash in life insurance policies early and use the funds to cover their care costs.
