Should I spend down assets so I can qualify for Medicaid to pay for my nursing home?

If we had a dime for every piece of bad advice our clients have been given by know-it-all friends and family members, we could have retired years ago. The idea that you have to dump your assets if you ever hope to afford a nursing home one day is one of the most common misconceptions we have to correct. However, we understand where the myth comes from, and we do have important information to share about smart options for ensuring you have access to quality care if you need an assisted-living facility or nursing home one day.

Medicaid Is a Needs-Based Program

The first fact to understand is that Medicare, as helpful as it has been for you since you turned 65, cannot be used to pay for a nursing home beyond the first 100 days. If your helpful friend told you that, they were right! The only government program that will pay for a skilled nursing facility is Medicaid, but you have to meet eligibility requirements, which include having a limited income and few assets. If your income and assets exceed what Medicaid allows, it seems to make sense that you just have to give away those assets, and then you will qualify. You can see where the advice comes from!

In reality, there is no need to squander or give away your hard-earned assets, even if you are worried about paying for a nursing home. In fact, doing so could cause more harm than good. When determining your eligibility, Medicaid will look back over your financial records for the previous five years, and if they see that you have spent, given away, or mysteriously lost the bulk of your assets, they will penalize you, and you won’t get the help you thought you were guaranteeing for yourself.

How a Medicaid Planning Attorney Can Help

If you are among the millions of seniors who are somewhere between being too poor to pay for even a day of long-term care and so rich you can pay out-of-pocket indefinitely, your smartest move would be to talk to an Elder Law attorney. We have sound financial advice, and a myriad of legal options for protecting your assets and ensuring you or your spouse gets the care you may one day need. When you meet with us, we will look at the following:

• Identifying your countable assets. You do not have to include everything you own when determining the value of your assets. For example, your home, one car, household furniture and goods, and certain personal effects are not counted among your assets. We will do a complete accounting of your countable and non-countable assets to determine how far away you are from qualifying.
• Purchasing non-countable assets. If you don’t already own a home or a car, it might be possible to spend down some of your savings to purchase these non-countable assets. However, you or your spouse must be capable of driving the car, and a second home is considered a countable asset, so the plan will not work if you already own a home. We can help you navigate purchasing non-countable assets in a way that is compliant with Medicaid qualification.
• Making pre-payments. You can pay off loans, such as your mortgage, car loans, and credit cards, and not have that count against you. You can also pre-pay for funeral and burial expenses. However, you cannot pre-pay for services such as utilities, medical services, or rent, or pay service providers such as housekeepers or caregivers in advance, as that would be considered a gift.
• Creating a Medicaid Asset Protection Trust. This is a type of Irrevocable Living Trust that holds assets for beneficiaries until your death. Once you create the Trust, you will lose all access to the money. Medicaid will not count the assets against you because they cannot be used for your support in any way. This is a good option if you want to preserve an inheritance for your children and grandchildren, but it is subject to the five-year look-back, so it must be established well in advance of needing long-term care.

Before you get too worried about how you will pay for long-term care, keep in mind that you can always qualify for Medicaid after your assets are gone. For example, if you have enough money to pay for one year of a nursing home and then your money will be gone, Medicaid can kick in at that point to cover the cost.

Are You Looking for an Estate Planning Attorney in Texarkana, TX?

If you are looking for estate planning advice, you need to speak with an experienced estate planning attorney as soon as possible. Contact us online or call our Texarkana office directly at 903.223.5653. We also have offices in Tyler, Paris, Longview as well as Magnolia, AR!