WHAT ARE THE "5-YEAR RULE" AND THE "3-YEAR RULE"?

The 5-year rule and the 3-year rule refer to the same thing. Before 2006 it was a 3 year rule. After January 2006 the time periods were extended and it became known as the 5 year rule. If you are discussing any current situation, you only need to keep in mind the 5 year rule.

The 5 year rule requires anyone applying for Medicaid (Title 19) government benefits to pay nursing home or other long-term care to provide the government with documents showing all of their assets and financial transactions for the 5 years prior to the request for benefits. The applicant must also pledge that they have fully disclosed all financial matters and that nothing is being hidden or left out.

The rule makes three things very clear. First, you should keep your bank statements, letters from insurance companies and other financial records for 5 years. If you throw things away or shred your papers then you may need to spend time and money replacing them later on.

Second, if you would not feel comfortable telling the government about something that you are doing, then you should probably think twice about doing it. There are really no secrets or short cuts.

Finally, not everything you do will be scrutinized by the government. Anything you did more than 5 years before you request government benefits should not cause you any trouble. Financial planning should include some discussion regarding whether you are healthy and independent enough to stay out of long-term care, or if you have enough money to pay for 5 years worth of care you're using your own money.

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