By Debra Verni, Esq.
The fear of many elderly individuals — perhaps even yourself or someone in your family — is that nursing home costs will consume their life savings before they can be passed to their heirs. This concern is real and has spawned elder care planning strategies designed to minimize the damage.
Background: Medicaid is a health care assistance program for elderly, blind, and disabled people in financial need. It covers nursing home costs, but it’s not easy to qualify for assistance. Generally speaking, an individual may own only a few assets—a car, certain personal belongings, a small amount of savings—and have a minimal income stream. The exact amounts are established by individual states. Since these standards are often unattainable, the assets of a nursing home resident may be exhausted by fees before becoming eligible for Medicaid.
Therefore, one typical objective of elder care planning is to “spend down” below the state Medicaid limits to qualify for assistance.
Traditionally, this has been accomplished through direct gifts made to other family members or by transferring assets to a trust that provides minimal payouts. However, there’s yet another hurdle: The Medicaid “look-back rules.”
Under the look-back rules, assets transferred within 60 months of the date of the relative’s application still count towards determining Medicaid eligibility.
Despite this pessimistic outlook, planning opportunities exist, you may be able to take advantage of certain exceptions to the strict rules for Medicaid assistance. For example, in certain cases, nursing home applicants do not have to sell their homes to qualify for Medicaid and transferring assets to certain people, such as a disabled child, does not trigger a period of Medicaid ineligibility.
It is generally recommended that people begin elder care planning for assets while they’re still healthy. This is an area of where profess
Verni is a principal at the Herzog Law Firm in Saratoga Springs.