Major Myth of Medicaid

A common misconception is that individuals who have previously been denied SSI and Medicaid must wait five years before reapplying.

Where does this belief come from?

One way is through a misunderstanding of the Medicaid asset spend-down rules. Let’s get into it. 

Understanding Medicaid Asset Rules for Elder Care

 Medicaid is often the last health insurance resource that many people have, regardless of whether they have a disability in early life. To enroll, a participant must have limited financial resources (including savings of any kind). Each state will set its own Medicaid program’s asset limit.  To better understand what Medicaid does—and doesn’t—cover, it's essential to speak with a Special Needs Certified Financial Planner®  who can guide you through a personalized strategy. Contact us today to start planning.

The 5-Year Look-Back Period: What You Need to Know

 The 5-Year Look-Back Rule is a requirement that states assets spent down within 5 years before receiving long-term care benefits can be included in eligibility calculations. This prevents unnecessary spending on assets just to become Medicaid eligible.

When you believe long-term care is a need and it will be unattainable without Medicaid, it is essential to review with a Certified Elder Law Attorney to make sure you are protecting your assets in a way that is meaningful and supported, before you need the care. Some transfers may be excluded from being reviewed when done correctly. 

Two Exceptions for People with Disabilities

 In the case of a younger adult with disabilities applying for SSI and Medicaid for the first time, the 5-year look back rule does not apply when using approved Medicaid protection accounts including an ABLE account for cash assets up to $19,000 (the 2025 contribution limit) and/or a First Party Special Needs Trust for assets above $19,000.

This means that individuals who require Medicaid assistance due to disability-related care and support can apply for health insurance and home and community-based services immediately, without delay, once those assets are protected.

 This immediate access to critical resources is a beacon of hope for many families trying to navigate support while caring for loved ones with disabilities. It provides peace of mind knowing that help is available when it’s needed most, without the stress of waiting for eligibility to kick in. While the family still needs approval through the Social Security Administration or the state's Medicaid system, this streamlines the timeline families can expect for benefits to start. 

Wondering how ABLE accounts, special needs trusts, and Medicaid benefits can work together in your situation? Schedule a consultation with a Special Needs Certified Financial Planner® to explore your options.

A Caring Approach to Navigating Medicaid

 As you consider these options for yourself or a loved one, we encourage you to reach out for support. Navigating Medicaid can be daunting. Utilizing a First-Party Special Needs trust is not always desirable for the person applying for benefits. Whether it’s discussing the cash protection planning or exploring the benefits of ABLE accounts and Special Needs Trusts, know that you’re not alone. Dependent Financial Planning can support with the big picture cash flow and long-term plan, while partnering with the attorney in your state to make sure you are following all your state-based rules of Medicaid and other benefit programs.  You and your family can receive the care and support you deserve.

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Take the first step toward building that future—speak with a Special Needs Certified Financial Planner® who understands the complexities of Medicaid and beyond. Book your consultation today.

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