However, Medicaid imposes strict rules on what you can and cannot spend assets on in the process of spending down. To prevent seniors from gifting assets to family members or trusts in order to avoid spending down assets, Medicaid programs don’t allow gifting non-exempt assets within five years of applying for Medicaid. For starters, Medicaid employs a strict audit system with supervisors who check your application and documents. Paying for medical care and equipment that isn’t covered by Medicare or Medicaid, such as a visit to the dentist or eye doctor, Paying for in-home care (note that you may pay a family member to provide in-home care, but you should formalize the agreement in writing and document your payments), You may transfer assets to a child who is permanently disabled or blind, You may transfer assets to a trust for whom the sole beneficiary is younger than 65 and permanently disabled, You may transfer your home to a child who is under 21; to a child who has lived in the home for at least two years prior to your moving into a nursing home, and who provided you with care that allowed you to live at home during that period; or to a sibling who has an existing equity interest in the home and who lived there at least a year before you moved into a nursing home, Bank accounts (checking, savings, money market, CDs), Retirement accounts (IRA, Roth IRA, 401k), Investments (stocks, bonds, mutual funds, brokerage accounts), Real estate other than your primary home (vacation homes, condos, land), Permanent life insurance policies with a combined cash value of $1,500 or less, Personal items, including jewelry and clothing. This question is often accompanied by another one — does Medicaid actually check your bank account? Under an irrevocable trust, a trustee is named to manage the fund. Contact your attorney to find out what method will work best for you. Subscribe to Elder Law Three Reasons Why Giving Your House to Your Children Isn't the Best Way to Protect It From Medicaid. This is called "estate recovery." If they exceed the financial limits, they will not qualify for Medicaid assistance. A life estate is a form of joint ownership of property between two or more people. Will a House My Parents Build on Our Property Be Protected from Medicaid? However, as long as the applicant’s spouse lives at home, there is no equity limit. There are only four exceptions when it comes to gifting for Medicaid spend down: Given the implications of improperly using or transferring assets, it’s important to meet with an experienced financial planner to create a spend down plan for Medicaid benefits. Although it can be sold, the proceeds must remain in the trust. When applying for Medicaid benefits, the state Medicaid agency is primarily concerned with your liquid assets (property that can quickly be turned to cash). Trusts 105 Peoria, AZ 85381, Phone: (480) 467-4337 Fax: (480) 464-5692. 105 Peoria, AZ 85381, Prepaying for funeral expenses (referred to as pre-need contracts), Paying off debt, such as a home mortgage, credit card balance, or car loan, Paying for home repairs (e.g. Need more information? These assets legally no longer belong to you, but are controlled by an independent trustee. Medicaid spend down requirements vary from state to state. If the applicant or the applicant’s spouse don’t currently live at home, the value cannot exceed $585,000 – $878,000 (depending on state limits). There are online guides for creating a spend down plan, but this isn’t something you should attempt on your own. Masshealth Financial Eligibility guidelines. Further, if properly drafted, the later sale of the home while in this trust might allow the settlor, if he or she had met the residency requirements, to exclude up to $250,000 in taxable gain, an exclusion that would not be available if the owner had transferred the home outside of trust to a non-resident child or other third party before sale. The MAPT is a type of an irrevocable trust, commonly set up by individuals approaching the golden years. Copyright © JacksonWhite PC, 2020, All Rights Reserved |. If you have additional questions about your family’s Elder Care / Senior Care Matters, you can count on (America’s National Directory of Elder Care / Senior Care Resources) to help you find local Elder Care / Senior Care Professionals who can help you with your family’s Issues of Aging. Protecting your home should be considered part of your overall Medicaid strategy City, State. As with a transfer to a trust, if you transfer the deed to your home to your children and retain a life estate, this can trigger a Medicaid ineligibility period of up to five years. This means the assets are safe from Medicaid estate recovery. making the home handicap accessible, replacing flooring, fixing the roof, repairing the foundation, etc.). A revocable trust, on the other hand, may be changed by the grantor and can be considered by Medicaid when they look at eligibility, meaning they are of no use in protecting assets from benefits, such as Medicaid. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. "https://" : "http://" ); (function(){var s=document.createElement('script');s.src=bbbprotocol + '' + unescape('%2Flogo%2Feldercare-matters-90317601.js');s.type='text/javascript';s.async=true;var st=document.getElementsByTagName('script');st=st[st.length-1];var pt=st.parentNode;pt.insertBefore(s,pt.nextSibling);})(); Copyright ©2020 ElderCare Matters, LLC. Option 2 of the top ten ways to protect your money and house from Medicaid or a nursing home is using an asset protection trust – continued from above . Luckily, there are actions they can take to help protect their assets and ensure that property and other assets are handed over to family members rather than left vulnerable to Medicaid estate recovery. Trusts provide more flexibility than life estates but are somewhat more complicated. In some states, however, that money can be “spent down” – lowering the income or assets right into the Medicaid eligibility range. Updates. This is called "estate recovery." With nursing homes averaging $79,000 a year, and many people living in nursing homes or assisted living facilities for three years (or more) on average, the expense can be staggering. Once the house is in the irrevocable trust, it cannot be taken out again. Can I Protect My Assets Under Massachusetts Medicaid Eligibility Rules? Firm Name Breaking the gifting rule results in a transfer penalty, a period of time during which you cannot apply for Medicaid benefits. Asset Protection Trusts To qualify for Medicaid, you may place assets, such as your home, in an irrevocable trust. The trustee takes charge of the day-to-day operations of the fund and is not required to make any specific payments. Purchasing personal items like clothing, furniture, electronics, etc. My elderly parents would like to sell their home and use some of that money to build a small house on our property to live in... You may be afraid of losing your home if you have to enter a nursing home and apply for Medicaid. All rights reserved. Some popular examples of exempt assets and services that you can pay for in the process of spending down assets for Medicaid include: Note that gifts and donations are not included on this list. Attorney Hegwood is a Member of the National ElderCare Matters Alliance, and she and her law firm have a Featured Listing on – America’s National Directory of Elder Care / Senior Care Resources to help families plan for and deal with the Issues of Aging. Other assets are “non-countable assets,” which include IRA’s if getting required minimum distributions, primary residences (such as your homestead), personal property, and pre-paid funeral expenses. In Arizona, you must have $2,000 or less to qualify for Medicaid benefits. In this case, the transfer creates a … The short answer is no, the case worker usually won’t check your bank account balance. Many people have worked long and hard to accumulate their nest-egg and they do not want to … To be eligible for Medicaid, an applicant’s assets, including income, must be less than a certain amount.