Too often people fail to plan for long-term care, which can be a very costly mistake. For some people, long-term insurance may be possible if applied for at an early age. Unfortunately, many people wait too long and are forced to pay out of pocket and spend down their life savings when long-term care is needed. If savings are insufficient to cover the needed care and a person’s resources become fully depleted, the State will often covers the cost of care through the Medicaid program. Unlike Medicare, which is an entitlement based system for short-term health care costs, Medicaid is a needs based program and has the ability to covers costs for an extended period of time. 
In order to qualify for Medicaid, people often seek to transfer assets away to family members and loved ones. However, except for limited exceptions, the transfer of property for less than full and adequate consideration within the five year period before applying for Medicaid will result in a penalty of ineligibility. This is one very important reason to plan for long-term care well in advance of when it is needed. Many people feel uneasy about simply giving their property away and consider a Medicaid Protection Trust as an alternative. A Medicaid Protection Trust is an arrangement that allows a person to transfer property to a trust in order to become eligible for Medicaid after a five year look back period. The benefits of this type of trust over an outright gift is that the trust instructions can be drafted to provide controls over the transferred property. A Medicaid Protection Trust can also be designed to provide flexibility if a medical crisis occurs before the five year Medicaid transfer penalty period has passed.
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