A common concern voiced by many of my clients is their ability to pay for the surging cost of nursing home care. I frequently find that most people have not invested in long term care insurance or have determined the cost of this specialty insurance is too prohibitive. Two common misconceptions encountered are that Medicaid will only pay for nursing home care once you and your spouse are impoverished or that the nursing home will take your home before you can qualify for assistance.
While the Medicaid rules are complicated and every situation different, there are some simple choices you can make in order to best preserve your property and become eligible for nursing home insurance under the Medicaid program. The first step in planning is to list all your countable and non-countable assets. Property typically counted as a resource includes cash, money in the bank, stocks, bonds, and the cash surrender values of life insurance. Other property is considered exempt and not countable by Medicaid. This includes household goods and personal possessions, one motor vehicle of any value, and prepaid burial expenses. Special rules apply to real estate. If you, your spouse, or a dependent child lives in the home, it will be considered exempt. If it is not considered exempt, you will be required to fill out a form when applying for Medicaid declaring your intent to offer it for sale or rent. Other income producing real estate may qualify as exempt, such as rental properties or farm land.
Once you develop a list of assets, there are various planning strategies to consider. One option is to take non-exempt assets and invest in exempt assets. If you live in an apartment, you may want to purchase a home. Paying off or reducing your mortgage is a great way to reduce assets to shelter them from Medicaid. If you have an old vehicle, you may consider purchasing a replacement auto. Prepaid burial expense for your children, your parents, your siblings, and their spouses can be purchased. Other more advanced strategies governed by special rules include setting up an irrevocable trust or investing in real estate or annuities.
A little advanced planning now gives you time to work within the existing Medicaid rules to preserve as much property as possible. If you or a loved one has not done any planning and is facing the possibility of entry into a nursing home, there are often steps available that can save thousands of dollars. The biggest mistake to make is to do nothing or wait too long to take action. Since the Medicaid rules are constantly changing, you should consult an attorney knowledgeable about Medicaid for assistance in reviewing any plan.
Michael T. Hotz
SPITZER HERRIMAN STEPHENSON
HOLDEREAD CONNER & PERSINGER, LLP
122 East Fourth Street
Marion, IN 46952
Telephone No. (765) 664-7307