Clients sometimes come to me having already done some do-it-yourself Medicaid planning, probably because they got some tips from a neighbor or simply were afraid of the perceived high cost of lawyers. However, this is one area where you definitely do not want to do it yourself!

Every Situation is Unique

First, the facts of your neighbor's situation are surely different from yours in ways you may not realize even matter. For example, the income of your neighbor's parent, cost of the nursing home in question, his parent's health and life expectancy, may all differ from that of your situation. Yet each of these factors will most likely change what an experienced elder law attorney or Medicaid planner considers to be advisable for your family.

Medicaid Rules are Always Changing

Second, the laws change frequently. So even if your situation were exactly the same as that of your neighbor, the rules of the game may have changed in the months or years since your their advice made sense. For example, when Congress passed the Deficit Reduction Act of 2005 on February 8, 2006, the "lookback period" (which penalized gifts that were made a certain number of months before a Medicaid application) was extended from 36 to 60 months. Applying even one month too soon following a large gift could have disastrous financial consequences. It pays to know the rules!

There Are Little-Known Loopholes

Third, your family situation may differ from your neighbor's in ways he may not be aware of. Even if he was aware or these specifics, he may not realize the importance of such a situation. There may be safe-harbors and exclusions that apply to your particular family situation that your neighbor may not have heard of. For example, you may have a sibling who is "disabled" as defined by the Social Security Administration. This is one exception to the general rule that making a gift causes a period of disqualification from Medicaid benefits. Making such a gift to a trust for the benefit of a disabled child (of any age) is exempt.

Every State is Different

Fourth, most people don't realize the major differences from state to state in many of the Medicaid rules. Although the basic framework for the entire program is set by the federal government and many of the rules are required to be the same in every state, there are also many sections of the law that allow each state to set its own rules, within certain limits. So, what may have worked for your neighbor's mother in Florida almost certainly will not work in Colorado.

Some Techniques Can Be Risky

Fifth, the "imaginative" asset-shifting technique your neighbor's mother utilized may indeed have "worked" that one time, with that one caseworker. That is certainly no guarantee that your parent will be so lucky with the same technique. You may not want to risk the consequences of such a method failing. Your attorney can help you assess the risks of each potential approach, and together you can make an informed decision.

As you can see, this is an area fraught with complications. Asking your neighbor's advice about the best computer or car to buy is one thing, but you proceed at your own peril if you rely on them for Medicaid planning tips!

The moral of the story is, if you move from your home to an apartment, independent living or assisted living facility, you probably should consider selling your former principal residence and dealing with the proceeds in a manner that will best provide for your care long into the future. Part of your plan may be to prepare for the eventuality of moving into a nursing home. If so, it is important to contact an experienced elder law attorney as soon as possible so that there will be ample time to put a foolproof plan into place, make gifts, if advisable, etc. The sooner you plan, the more of your assets you will be able to keep.