How long do you keep your personal and financial records? 1 year? 3 years? 5 years? 7 years?

With identity theft being the crime of the time, most of us have been told that the safest way to dispose of our personal records is by shredding them. While shredding your personal and financial records is the most recommended and safest way to dispose of your documents, the challenge is knowing when to get rid of your important personal documents.   

In the “Managing Your Money” column in an issue of USA Today, the writer advised that “canceled checks that aren’t related to your taxes can be shredded after you’ve reconciled them with your bank statement.” This may be accurate information for IRS purposes, however, this is not the best advice for a senior who may someday need nursing home care. The IRS is not the only government agency that requires supportive documentation. When qualifying for Medicaid benefits, the Department of Public Welfare can require five years of canceled checks and other financial documents to support an application for nursing home coverage.

Qualifying for Medicaid benefits for long-term care has always been complex; however, the Deficit Reduction Act of 2005 has made this cumbersome process even more difficult. The Deficit Reduction Act of 2005 (DRA), which was signed into law by former President Bush on February 8, 2006, imposed a five year “look-back period” (the period immediately before a person applies for Medicaid). Therefore, Medicaid agencies may require copies of canceled checks and bank statements, documenting all expenditures made within the five-year window.

Furthermore, with bank mergers, obtaining canceled checks can be a nightmare. Saving canceled checks, rather than shredding them, can prevent unnecessary anxiety and expenses. 

Seniors who follow the advice to “shred it all” may face serious problems should they need to apply for Medicaid for nursing home or in-home care. A senior who may someday need nursing home or in-home care should keep financial records for at least five years.

Our goal at Steinbacher, Goodall & Yurchak is to provide you with peace of mind. We will work with you and your family to develop a comprehensive estate and long-term care plan that fits your individual needs and meets your specific goals. To schedule your initial consultation, please contact Steinbacher , Goodall & Yurchak at (800) 351-8334. We look forward to talking with you.