A nurse in blue overalls pushing a stretcher in a hospital

Medicaid Planning In A Crisis

Although planning in advance for facility care is best, an unanticipated health event may necessitate instant action to protect assets. Some techniques which may work are set forth below:

Purchasing a one-percent (1%) interest in the homesite or other real property as joint tenants with right of survivorship. If a child purchases a one-percent interest, no gift has occurred and no Medicaid transfer sanction results. The parent owns 99% of the real estate, and the child owns 1%. The 99% interest bypasses the probate estate of the parent at death, thereby avoiding the Medicaid estate recovery claim. This technique may offer a last resort method to protect the home. The mechanics should be thoroughly discussed with your attorney.

Utilizing the Community Spouse Resource Allowance (CSRA) and allowable spenddown. The spouse who is at home can retain one-half of the countable assets, up to $126,420.00. The remaining amount must be spent down to the $2,000.00 level for the facility spouse to qualify for Medicaid. To spend down, the couple can make improvements to any real estate in which either spouse has an interest, spend any amount on prepaid funerals for both spouses, and purchase a vehicle for the healthy spouse. Additional funds can be protected through the use of a specialized Medicaid compliant annuity.

Planning for the possible death of the healthy spouse. The healthy spouse may consider transferring assets to his or her name and changing his or her Will and beneficiary designations to provide that, if a spouse dies suddenly, the assets are held in trust for the nursing home spouse or are given to children. If the healthy spouse dies, the nursing home spouse may then immediately qualify for Medicaid.

Using Spousal Transfers. If a spouse is entering an assisted living facility only, and if the spouse entering the facility is below the income limit for Special Assistance (“SA”) (the program that pays for assisted living), he or she can transfer all of his or her assets to the healthy spouse and qualify for SA based on assets.

Transferring assets in a timely manner after Medicaid qualification. After one spouse qualifies for Medicaid, transfers made by the other spouse do not affect the Medicaid qualification of the spouse in the facility. Therefore, the healthy spouse may consider making transfers to children (structured in the appropriate way) to protect the assets in the event he or she eventually needs facility care.

Please remember that every situation is different, and an attorney should be consulted directly for specific advice.

*DISCLAIMER: This article is for general information only. It is not intended as a source of legal advice, and no information provided should be considered or relied upon as legal advice on any specific matter.