MEDICAID PLANNING: PROTECTING YOUR HOME, ACREAGE, AND OTHER ASSETS FROM THE NURSING HOME Entering into nursing home care is one of the greatest fears facing American senior citizens today. Not only does the nursing home represent the loss of autonomy, it can be a costly loss of independence. In Georgia, the average out of pocket cost for a single bedroom nursing home unit is over $67,500 annually (according to Genworth). The best option for individuals needing nursing home care is to ensure that they qualify for Medicaid. If one qualifies for Medicaid, the government will cover the cost of the nursing home stay. Qualifying for Medicaid, however, is not as simple as one may think. In order to qualify for Medicaid, the applicant must satisfy a very stringent “means test,” wherein the applicant’s assets and income are examined. Medicaid has very strict asset and income limitations. In order for a single individual applying for the nursing home to qualify for Medicaid coverage, he or she can have only $2,000 worth of assets, and his or her monthly income must be less than $2,130. The rules are slightly different for married couples. Specifically, the “community spouse” or the spouse not entering the nursing home, may have significantly more assets without jeopardizing the other spouse’s eligibility for Medicaid coverage. If an applicant fails to qualify for Medicaid coverage, they must private pay, or pay out of pocket, for their nursing home care. If the applicant does not have sufficient liquid assets to cover the cost of the nursing home, the nursing home, via the Medicaid Recovery program can place a lien on the individual’s home and land, in order to recoup the expense of the individual’s nursing home care. This means that the government can, and will, force sale of the applicant’s property in order to cover the repay itself. If the applicant had hoped to leave the house and land to his kids, this option has gone out the door. In situations where the land and house have been in the family for a long time, this can be particularly devastating. The good news is that there is a way to prevent Medicaid Recovery from taking a patient’s home and land. Through proper planning with an estate planning and elder law attorney (such as myself), one can ensure that they will qualify for Medicaid should they eventually need nursing home care. This is accomplished by using an irrevocable trust, which acts to remove the property from the nursing home care recipient’s name, while providing that individual with a life estate in the property. This ensures that should the care recipient become healthy again, that they have a home to return to. Establishing this trust can also provide individuals with significant savings (often times tens of thousands of dollars), while also allowing one to dispose of their property as they please to their children, grandchildren, or church, rather than have the government take it. Finally, an important thing to remember during this type of Medicaid/nursing home planning is the government imposed five year “look-back” period. This means that when determining the applicant’s assets, the government will include in their calculation all assets given away for less than fair market value over the past five years. Any such transfer creates a penalty wherein the nursing home patient must private pay for their nursing home care, until the penalty period is over. Thus, in order to be secure in the protection of one’s assets from the nursing home, all transfers into trust must be completed five years prior to applying for Medicaid. I recommend that anyone over the age of 65 set up a consultation with an estate planning and elder law attorney to discuss planning for the possibility that they or their spouse may someday need nursing home care. Alfred Fargione is an Athens area estate planning and elder law attorney recently associated with the Law Office of Dennis Helmreich. To schedule an appointment with attorney Fargione, please contact him at (706)743-3410 or (706)372-9066 copyright January 2014, Fargione Law, LLc
Posted on: Fri, 31 Jan 2014 01:48:35 +0000
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