Moving into a nursing home is not only an incredibly stressful process, but it is extremely costly, too. Unless you’ve been carrying long-term care insurance, you are probably going to end up paying the costs of the nursing home care out-of-pocket until you qualify for Medicaid. When paying out-of-pocket, most people find themselves quickly running through their life savings…and their loved ones’ inheritances.
Because the need for long-term nursing care can arise unexpectedly, it’s preferable to plan for this situation well in advance. By spending down your assets throughout your lifetime—in advance of Medicaid’s 5-year lookback period—and establishing asset protection trusts, you can help ensure that you will qualify for Medicaid when the time comes. If you find yourself facing an unexpected nursing home stay, however, and you haven’t made the proper preparations, Medicaid crisis planning can help. You don’t have to lose everything you’ve worked a lifetime to accrue…
How to Protect Your Assets and Qualify for Medicaid
Medicaid eligibility is based on two factors: the assets you own, and your income. Because Medicaid only covers nursing home stays when a person doesn’t have any other resources, estate planning professionals recommend that you “spend down” your assets gradually over your lifetime. This process allows you to place your assets in trusts or other estate planning vehicles so they are protected—while still allowing you to qualify for Medicaid.
One mistake that many people make when faced with Medicaid eligibility is to give away or sell off their assets all at once. It is easy to panic when you find yourself faced with a nursing home stay, and the sudden need to qualify for Medicaid. However, when you apply for Medicaid, your financial transactions over the past 60 months are scrutinized, and—if you have given away your assets too readily— Medicaid will hit you with a sizeable penalty.
Another mistake people make is to convert exempt resources into countable resources. Your house and car are exempt resources and will not count towards your Medicaid eligibility. If, however, you sell these resources, the money you receive does count, and will be wasted paying the nursing home before Medicaid will step in to cover the costs.
Medicaid Crisis Planning
While it’s far preferable to plan for all possibilities well in advance, if you suddenly find yourself or a loved one facing a nursing home stay, it is still possible to hold on to at least some of your assets. Medicaid crisis planning, a process which allows you to quickly qualify for Medicaid, can be an extremely helpful option. It is important that you speak with a professional estate and elder law attorney before you make any moves that may put your assets—and your long-term healthcare—in jeopardy.
At Miller Estate and Elder Law, we have years of experience working with families facing a nursing home crisis situation. Contact us today using the brief form below to get started on devising a plan to protect your hard-earned assets, whether you are already in the nursing home, will need nursing home care soon, or are (hopefully) many years away from needing long-term care.
Feel free to contact our office with questions. You can also download a free copy of The Basics of Estate Planning in Alabama, or attend one of our upcoming free workshops.
If you need more guidance, we are happy to help. Contact us using the brief form below.
