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Medicaid, Nursing Home and Asset Protection Planning

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Nursing Home, Medicaid and Asset Protection Planning

The following is intended as a general overview of the issues associated with eligibility for Medicaid benefits to pay for nursing home and other care services such as assisted living and in-home care. Medicaid will often be the primary source of payment for nursing home, assisted living and in-home care services. Medicaid rules and eligibility criteria can be confusing and overwhelming. You should not use the information contained below as legal advice.  You should contact your attorney if you are in need of legal counsel concerning these issues.


BASIC Medicaid ELIGIBILITY ISSUES.  

There are four initial eligibility requirements:

  • Citizenship.  A Medicaid applicant must be a U.S. Citizen; a lawful alien resident; or a qualified alien.

  • Residence.  A Medicaid applicant must be physically present in the state and county    

  • where the Medicaid application is made.

  • Medical.  A Medicaid applicant must be 65 years of age or older, blind or disabled, and  must require an appropriate level of care for daily living.

  • Facility.  The long-term care facility must have a contract with the Ohio Department of Job and Family Services.


ADDITIONAL ELIGIBILITY ISSUES. 

 The following are additional eligibility issues to consider:

  • Resources.  A Medicaid applicant must have no more than $2,000.00 in countable assets.

  • Asset Transfers.  A Medicaid applicant must not have made an improper transfer of assets within the look-back period.   The look-back period is discussed below.

  • Income.  A Medicaid applicant must be income eligible.  Income in excess of $2,313.00 per month will require special planning to insure income eligibility.

RESOURCES. 

A Medicaid applicant must have no more than $2,000.00 in countable assets to qualify for Medicaid benefits.  Generally, all assets owned by the applicant and, if married, the applicant’s’ spouse are consider countable assets.  Non-countable assets are not counted towards the $2,000.00.  Some examples of non-countable assets are as follows:

  • Household goods and personal effects.

  • One automobile per married couple regardless of value, or one automobile for a single individual if It is used for transportation.

  • The personal residential home if:

    • The spouse or dependent relative of the Medicaid applicant lives in the home.

    • A dependent child of the Medicaid applicant who is under the age of 21, or a disabled child of a Medicaid applicant who lives in the home.

    • A sibling of the Medicaid applicant has lived in the home for at least 1 year and has an equity interest in the home.

  • A prepaid, irrevocable funeral contract for the Medicaid applicant and the applicant’s spouse.

  • A burial plot for the Medicaid applicant and the applicant’s spouse.


COMMUNITY SPOUSE RESOURCE ALLOWANCE. 

If a Medicaid applicant is married, the spouse is considered the community spouse.  A community spouse is provided a resource allowance to prevent spousal impoverishment.  The amount of this resource allowance varies depending upon the amount of countable assets the couple has on a particular date.

ASSET TRANSFERS AND GIFTS. 

In addition to considering any assets the Medicaid applicant owns to determine eligibility, Medicaid will also determine if any assets were transferred within the look-back period.  The look-back period is sixty (60) months from the date of the Medicaid application and institutionalization.  A transfer of assets for less than full value is a gift.  If a gift is made in the look-back period, and is not otherwise exempt, it is deemed an improper transfer of assets.  An improper transfer will create a period of ineligibility for Medicaid benefits.  There is no criminal penalty for transferring assets in anticipation of qualifying for Medicaid benefits.  The transfer of assets is a perfectly acceptable Medicaid planning technique, and a highly effective one if properly used. However, if the asset transfer strategies are not properly implemented, severe, adverse consequences may result.

INCOME.

Generally, all of the Medicaid applicant’s income is used to pay for long-term nursing care except a $50.00 personal, monthly needs allowance and certain medical expenses, medical insurance premiums and deductibles. In a spousal case, a spouse may possibly supplement their monthly income by keeping a portion of the Medicaid applicant’s monthly income.  No income of the Medicaid applicant’s spouse is used to pay for the nursing home care.

Asset PLANNING And medicaid.

Medicaid planning generally involves 3 main goals: 

  • Qualifying some for full Medicaid to pay for the nursing home stay or other care as quickly as possible.

  • Legally preserving as many assets as possible.

  • Maximizing income savings and efficiency.

Generally, there are more Medicaid planning strategies available to married couples than single individuals.  The strategies that may be available and appropriate will depend upon if factors and must be implemented correctly.

AS SUCH, IT IS EXTREMELY IMPORTANT THAT YOU CONSULT WITH LEGAL COUNSEL PRIOR TO IMPLEMENTING ANY MEDICAID PLAN TO INSURE YOU ARE MAKING PROPER DECISIONS BASED UPON YOUR PARTICULAR SITUATION AND DESIRES.  

That being said, the following are some strategies that may be appropriate to consider:

  • Purchase exempt resources, such as a home, home repairs or upgrades, funeral plan, or the payment of debt.

  • Gifting outright to one (1) or more individuals.

  • Gifting to an irrevocable trust.

  • Borrow against home equity.

  • Purchase of a Medicaid compliant annuity.

  • Convert whole life policies to term life polices, or to cash.

  • Pay for caregiver services.