When applying for Medicaid nursing home coverage, an applicant’s income and assets have to be under a restrictive cap to be eligible for the benefit. As part of the eligibility determination, the state Medicaid agency also looks back at any below market transfers that the applicant made in the previous five years and adds them back to a person’s current assets.
However, there are some transfers that are exempt from counting towards the asset cap.
Transfers between spouses do not incur any penalty for applicants. Medicaid looks at the combined assets of a couple when determining eligibility. The applicant’s spouse has a larger asset cap than the applicant. A transfer from an applicant to the applicant’s spouse can, without penalty, bring the applicant closer to Medicaid eligibility. One caveat is that the transfer has to go entirely to the spouse and not split between the spouse and children or other relatives.
Another category of exempt transfers are certain transfers for the sole benefit of a disabled child. The form of this transfer is generally in the creation of, or a transfer to, a trust for the disabled child. Before attempting this, however, individuals should meet with an attorney with expertise in special needs law to make sure that the trust in question will qualify for the applicant’s exemption from the Medicaid look-back period and not endanger the disability benefits of the disabled child.
A more specific exemption is the transfer of the applicant’s house to a child who served as a caretaker for the Medicaid applicant. To qualify, a the caretaker child has to have lived in the house for at least two years and provided care that delayed the need for the applicant to enter a nursing home. This exemption, however, is both more difficult to qualify for and less generous than it appears.
Medicaid laws and regulations vary by state. Please meet with an experienced elder law attorney in your state before attempting any Medicaid planning.
Ultimately the best planning for a potential application for Medicaid nursing home coverage is done with as much time as possible before a nursing home stay becomes necessary. Given enough time, an elder law attorney can help develop a plan that maximizes asset protection and allows for potential Medicaid nursing home eligibility.
Please call Martha C. Brown & Associates at (314) 962-0186 to develop a plan to protect your assets from a potential nursing home stay.