Many seniors have to rely on Medicaid to pay the high cost of care in a skilled nursing facility. However, Medicaid is a needs-based program, which means that one must meet certain income and asset limits in order to qualify. Many seniors therefore find themselves needing to “spend down” their assets to become eligible, which can significantly affect their estate plans. Seniors cannot simply give assets to family members in order to qualify, as such transfers during Medicaid’s five-year “look back” period will trigger penalties.
By planning well ahead, many families are able to avoid the spend-down issue by purchasing long-term care insurance or transferring assets early enough that they are not affected by the look-back period. However, those who are in immediate need of long-term care do not have the luxury of protecting their assets in advance, and must focus on spending down assets in a way that enables them to qualify for Medicaid.
Certain “non-countable” assets do not have to be spent down or sold in order to qualify for Medicaid, including the home, a vehicle, household goods, personal effects, some prepaid funeral arrangements, and a limited amount of cash. In most states, therefore, one can safely spend down savings by using them to pay for non-countable assets. This may include paying off a mortgage or buying a new home, making repairs to a home, replacing home furnishings, replacing an old vehicle, or prepaying funeral expenses. In most cases, one may also pay off any legitimate debt, such as credit card debt.
In addition, most states permit a Medicaid applicant to make qualified payments for caregiving services in the home, when this helps the person stay at home and avoid nursing home costs. The caregiver who accepts such payments may be a family member, provided there is a written agreement and the caregiving services are not prepaid.
Medicaid rules can be complex, and they vary from state to state, so consultation with an experienced elder law or estate planning attorney is highly recommended.
Learn more about helping seniors and their families plan for the future by visiting www.elderlawnewyork.com.
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