Medicaid & Nursing Home Planning

Medicaid & Nursing Home PlanningMedicaid and Nursing Home Planning is an extremely fast-growing sector of law and is our fastest-growing practice area. With nursing homes costing $5,000 a month or more, the expenses can wipe out a lifetime of savings in a hurry. Few people have insurance to cover these expenses, leaving many wondering how they’re going to pay. Most people facing an extended or permanent stay in a nursing home wish to keep as much wealth in the family as possible, instead of paying it all to the nursing home. With careful planning, in many circumstances, one can obtain Medicaid benefits to pay the cost of the care while preserving a significant amount of assets for the family.

Questions? Find Answers in Our Guide

Using Medicaid vs. Medicare to Pay Nursing Home Expenses

If possible, it is better to use Medicaid benefits to pay for nursing home expenses instead of Medicare benefits, for several reasons. The main reason is that Medicare only covers up to 100 days in a nursing home; therefore, Medicare is not a viable option to pay for long-term care in a nursing home. Medicare does not cover as many services and expenses as Medicaid so you may be limited in the treatment options available if you use Medicare.

Unfortunately, Medicaid is a state and federal program that pays for medical care for low-income individuals. You must meet financial requirements in order to qualify for Medicaid benefits. If you do not meet the financial requirements, an experienced nursing home planning attorney may be able to assist you in becoming “medically needy” to meet the financial requirements for Medicaid benefits.

Spending Down Assets to Become Eligible for Medicaid Benefits

Before you consider spending down assets, you must consult with an attorney who has extensive experience in nursing home planning and Medicaid issues. First, some medical conditions may automatically qualify you for Medicaid benefits, regardless of your assets. If you do not have a medical condition that automatically qualifies for Medicaid, you may want to consider spending down assets to become eligible for benefits.

Unfortunately, many people assume they can “gift” their assets to family members as a way to reduce their overall net worth to qualify for Medicaid; however, Medicaid has rules regarding gifts or transfers during the five years prior to your application for Medicaid. Therefore, it requires careful planning in order to reduce your countable assets to qualify for Medicaid. An experienced nursing home attorney knows the assets that are countable toward the maximum limit for assets and the best way to reduce your countable assets that won’t negatively affect your Medicaid application.

Are There Risks Involved With This Type Of Nursing Home Planning?

The most serious risk associated with this type of nursing home planning is the loss of control of assets. When you are “gifting” assets to someone, you lose control over that asset. The asset then becomes the property of the receiver to do with whatever the receiver wishes. The person you give your assets to may lose the assets in a divorce or bankruptcy, decide to sell those assets, or pass away leaving the assets to be distributed through the person’s probate estate. Choosing who should receive your assets is a very important and crucial decision when attempting to reduce your countable assets to become eligible for Medicaid.

Is There A Better Way?

Yes, a Medicaid trust can serve the same purpose without risking your assets. By establishing an irrevocable Medicaid trust, you are transferring your assets to the trustee of the trust rather than to a specific person. The person you appoint as your trustee manages the trust according to the terms of the trust but the person does not own the assets within the trust. The trustee normally does not use the assets in the trust for his or her benefit. Instead, the assets are held inside of the trust and, if used correctly, can be a source of funds to pay the expenses of the senior citizen who is in the nursing home.  Another benefit of the trust is that the assets within the trust are protected from the trustee’s creditors and probate estate.

How Can We Help You with Medicaid and Nursing Home Planning Issues?

George Lovett has spoken and written on the Medicaid and Nursing Home Planning issues dozens of times to lawyers, nursing home administrators, and families. The attorneys at Lovett & Lovett, Attorneys at Law have the experience to address the broad range of concerns posed in these cases, such as:

  • What happens to the spouse remaining at home?
  • What assets can be kept?
  • Who can be involved in the planning and who cannot participate?
  • What documents should we have?
  • When it is appropriate to make gifts?
  • What are the tax consequences to making gifts?
  • How much can I give away in a gift?
  • Who should make the gifts? Who cannot make gifts?
  • How should all members of the family be treated?
  • Can a trust be useful?

If you or a loved one faces a permanent nursing home stay, or if you are considering assisted living, we can help you plan for these matters. We may be able to help your family retain some of your hard-earned dollars, instead of spending it all for nursing home care. For more information about Medicaid and Nursing Home Planning, read the articles written by experienced attorneys or see our guide, Medicaid Planning Techniques for Nursing Home Residents.

Contact us for an initial consultation. We’ll answer your questions and let you know how we can help.