Medicaid nursing home coverage can be a valuable resource in helping individuals afford nursing home care. However, the process of planning, applying, and qualifying for Medicaid nursing home coverage is fraught with many pitfalls.

Ultimately, the sooner individuals are able to meet with an elder law attorney and begin planning for a potential Medicaid application, the more likely they are to preserve their assets in the event a nursing home stay becomes necessary.

One of the factors that drives the ability to preserve assets when applying for Medicaid is the look back period. In general, any transfers that are for less than fair market value that were made in the five years prior to applying for Medicaid get added back to an individual’s current assets for the purpose determining Medicaid eligibility. Below market transfers and gifts could include things like transferring real estate to children or paying for a relative’s college tuition.

If non-essential assets are fully transferred more than five years prior to applying for Medicaid, an asset preservation trust can preserve assets and provide for beneficiaries. However to ensure that the trust is properly drafted and administered, individuals should have the trust drafted by an elder law attorney. The danger of a poorly drafted trust or improper transfer is that individuals end up paying for both the initial transfer and have to pay more out of pocket for nursing home coverage before they become eligible for Medicaid.

Another area that requires the expertise of an elder law attorney in your state is knowing what is and isn’t exempt from being a countable asset when applying for Medicaid. Different states have different rules regarding exemptions for real estate, retirement accounts, insurance policies, and other types of assets. These exemptions can vary significantly from state to state and change over time. One danger that could result from poor planning is the selling off of what would have been an exempt asset in a misguided attempt to qualify for the Medicaid asset cap. Selling off an exempt asset makes the cash from the sale countable for the purposes of Medicaid which then increases the amount an individual will have to pay out of pocket for nursing home coverage.

To develop a plan to preserve your estate in the potential event of a nursing home stay, please call Martha C. Brown & Associates at (314) 962-0186.