Nursing home costs can quickly get out of hand. Medicaid is an option for those suffering financial hardships due to nursing home costs. However, when turning to Medicaid, asset protection is crucial.
Medicaid is a federally funded government program that will pay long-term nursing home costs. It helps those with no money, assets, or insurance obtain nursing home care.
To qualify for Medicaid coverage, a nursing home resident cannot have more than $2,000 in cash or assets. Protection is possible by transferring assets to another person or a trust. With no assets in place, a person qualifies for Medicaid. However, what if one spouse is entering a nursing home and the other not? Federal and State Medicaid laws determine the assets the spouse of a nursing home resident can retain. Usually the non-residing spouse retains 50% of the assets of both spouses, based on the assets owned when the other spouse enters a nursing home for at least thirty days.
Some states allow the non-residing spouse to retain $101,640 of the couple's assets. (This figure changes regularly.) Other states allow the non-residing spouse to retain one-half of the couple's assets up to $101,640. If assets are under $20,328, the non-residing spouse may usually retain it all.
Most people will live in a nursing home at some point in their lives. Nursing home costs can add up and quickly consume personal savings. Some nursing home costs exceed $10,000 per month.
Medicaid asset protection begins with transferring assets before entering a nursing home. By gifting assets, the nursing home resident qualifies for Medicaid benefits. However, there are penalties. Transfers carried out three years prior to individuals or five years prior to a trust can incur a penalty. This penalty is usually a period of disqualification of Medicaid benefits.
When seeking asset protection from Medicaid, consult an attorney experienced in dealing with Medicaid. Proper planning will guarantee security for important and valuable assets.
The non-residing spouse must spend or give away the remaining assets above the qualification limits. The simplest way to qualify is by simply spending the remaining assets. Penalties may apply for giving away the remaining assets, possibly causing a disqualification or gap in Medicaid eligibility for nursing home costs.
One other option is for the non-residing spouse to turn the assets into non-countable assets by spending the money on home improvements, buying depreciable assets like a car, or by purchasing a Medicaid annuity.
