By Kim Boyer
The budget crisis has made obtaining Medicaid more difficult. Still, elder law attorneys may be able to assist individuals and families in developing estate plans to avoid depleting their assets, should they become ill and need long term care.
For those individuals who are already in a nursing home, despite the harsh rules, elder law attorneys are continuing to help them qualify for Medicaid benefits while maximizing the amount of money they are able keep. Here is a case example.
Betty’s husband, Frank, needed a nursing home which would cost the couple over $7,000 each month. Not including their home, their assets totaled roughly $150,000 at the time Frank entered the nursing home. Betty was told that she could keep the couple’s home as an exempt asset and then once they spent down to approximately $75,000, Frank would qualify for Medicaid.
We advised Betty that she could petition for division of assets and income, and set aside $115,940 (2013 figure) to herself as her sole and separate property, called her Community Spouse Resource Allowance (“CSRA”). In addition, she could purchase a Medicaid qualified annuity with the additional portion of their assets, with terms of the annuity conforming with the Medicaid rules. Betty saved over $75,000, and she has additional income for her life to provide financial security.
Before purchasing an annuity, it is imperative that you consult with someone who understands the new criteria for annuities under the DRA. If structured improperly, the same annuity purchased by Betty could have resulted in an 11 month Medicaid penalty during which Frank would be ineligible for Medicaid.
Please keep in mind that Medicaid planning is very fact-specific and not all of the above planning techniques work in every situation. Before spending down all of your assets, we recommend contacting an elder law attorney knowledgeable in the area of Medicaid laws.
Disclaimer: Information provided as a service of Kim Boyer, Certified Elder Law Attorney, updated as of 01/01/13. It does not constitute legal advice. For specific questions you should consult a qualified attorney.