Financial planning for emergency nursing home cases involves two major disciplines: legal and financial. Variables, such as the income of a nursing home resident, the cost of nursing home expenses, the amount of assets available and the determination of any special circumstances to obtain exemptions are needed to formulate a plan to protect the maximum amount of assets. The laws for single people and married people are structured differently. In either case, a plan is needed to avoid spending all of your assets before you begin to get funding from Medicaid.
Strategies for Married Couples
In the event a married individual (only one spouse) needs Medicaid Benefits, the rules and regulations are less egregious to help prevent the total impoverishment of the spouse not in the nursing home. The spouse in the nursing home still is only entitled to keep $2,000 or less, but the spouse in the community is allowed to keep a maximum of $130,380. Again, by following the rules and regulations created by federal and state law, a married couple is able to utilize exemptions and asset preservation techniques that allows one to protect greater than the $130,380 limit even after an individual enters a nursing home with the proper planning.
Strategies include exploring the following:
• Alternatives to nursing home care
• Utilizing spousal transfer rules—there are currently no penalties for transfer of assets between spouses
• Applying for some of nursing home spouse’s income to be preserved for an at home spouse when applicable • Converting non-exempt assets into exempt assets Transfer non-exempt assets into a Medicaid compliant annuity
• Protecting the family residence which is an exempt asset and is not lienable as long as the at home spouse is alive and is not in a nursing home
• Protecting and verifying previous estate planning and gifting strategies For a specific listing of exemptions, please refer to page 5 of this booklet.
7 Strategies for Single Individuals
In the event a single person is faced with nursing home costs, in order to qualify for Medicaid Benefits, the individual may have a maximum of only $2,000 or its equivalent in assets and is allowed to keep $72.80 per month in income.
Fortunately, by following the rules and regulations created by federal and state law, an individual is able to utilize exemptions and asset preservation techniques that allows one to protect greater than the $2,000 limit, even after an individual enters a nursing home with the proper planning.
Strategies include exploring the following:
• Alternatives to nursing home care
• Utilizing appropriate exemptions (see page 4)
• Transfer non-exempt assets into an approved pooled trust (D4C)
• Transfer non-exempt assets into a Medicaid compliant annuity
• Protecting and verifying previous estate planning and gifting strategies
• Transfer non-exempt home to an adult child caregiver, disabled child or sibling when appropriate and applicable
Post Planning After Medicaid Approval
A critical strategy in the Medicaid Planning process involves situations that may occur after approval that could potentially disqualify the resident for continued benefits. For instance, if planning is being done for a married couple and the at home spouse predeceases the spouse in the nursing home, any assets the nursing home spouse inherits could be a disqualifying event causing Medicaid to deny ongoing benefits. Therefore, after approval for benefits is achieved, the spouse at home should establish a plan protecting the remaining assets. An appropriate plan should consider any current or foreseeable care options, financial and legal needs of the at home spouse.
Also, just as vital, planning must be done in anticipation of the potential for future nursing home needs of the at home spouse.
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