If you’re like most people who find that they need nursing home care, chances are that you’re a little taken aback at the cost. Long-term care costs have been on the rise for some time now, and many seniors now face per day costs that can exceed two hundred dollars. Few seniors have amassed the type of wealth required to pay nursing home costs of six-thousand dollars a month or more! And while some seniors are already sufficiently impoverished to almost automatically qualify for programs like Medicaid, many more are not. For those seniors, an effort must be made to reduce income and assets to meet the program’s strict eligibility requirements.
Seniors who confront that challenge are often faced with some frustrating choices. Do they devote all their existing assets to their nursing home costs to impoverish themselves and qualify for benefits? Do they seek out help from friends and family? And regardless of which of those options they choose, how will their decisions impact their ability to leave behind a legacy to their loved ones? If you’re interested in protecting assets from nursing home costs, then there are some strategies that can help.
How Assets are Counted and What Gets Exempted
Before you begin any Medicaid planning, it is important to understand that you won’t need to worry about protecting all your assets. Under Georgia law, certain assets are already exempted from consideration during the eligibility calculation process. For example:
- Your home is excluded if the equity value is no more than $500,000
- Your burial plot and service costs are excluded, if everything is prepaid or in an account designated for that purpose.
- Any term-life insurance policy not exceeding $10,000 is excluded from consideration. Larger policy payouts may be pursued by Medicaid as part of its estate recovery efforts. Whole life policies are counted, except for any amount allocated for burial.
- One automobile is exempted from consideration.
- IRAs, 401(k) accounts, and other retirement vehicles are excluded when regular distributions are being taken.
- Household belongings and personal items are not counted as assets either.
- Properties like rental units or other real estate that produces income is excluded – though income derived from those sources may still be earmarked for paying a portion of the costs of care.
As an individual, the total value of your countable assets cannot exceed $2,000. That includes assets such as bank accounts, stock portfolios, and similar cash accounts or items that can easily be liquidated to pay for your nursing home expenses. If you’re married, your spouse is entitled to keep a large portion of your countable assets – as much as $109,500. Everything else must be spent down or otherwise reduced to enable you to qualify for the benefits you need.
What Assets Can be Protected?
There are many different types of assets that you can shield from Medicaid eligibility concerns, while still ensuring that you qualify for the program’s benefits. With the right strategies in place, you can protect a large portion of your wealth, including business interests and personal assets. To safeguard your assets and income, however, you will almost certainly need to use one or more of the following strategies:
- Gifting. It is possible to simply give away large portions of your wealth before you need Medicaid. You can even give away assets and trust your family members to use that wealth to benefit you when you need it. However, this can be a tricky proposition, since Medicaid has a five-year look-back power that enables it to review all your gifts and transfer assets made during the five years immediately preceding your application for benefits. If they find questionable transfers, you could face penalties that would make you ineligible for Medicaid for months or years.
- Use an annuity. This can be an effective way to remove wealth from your estate when you don’t have much time for other kinds of planning. This strategy can help you to avoid any spend down of assets under duress.
- Spend down the assets. With this strategy, you simply spend those excess assets in ways that won’t trigger any sort of penalty. For example, you could spend the money on a better home for your spouse, buy a brand-new vehicle, or pay for home repairs or upgrades. You could even but new furniture for the home or do other things that will make your community spouse’s life more enjoyable. You can also just pay off existing debts like a mortgage or insurance, or even prepay your taxes.
- Use an Irrevocable trust. Irrevocable trusts provide benefits that the revocable variety ignore. By using an asset protection trust designed to shelter wealth, you can ensure that the asset principle is beyond your control and thus beyond Medicaid’s as well. You can even use a trust that pays you money over time, ensuring that you are never left completely dependent upon the tender mercies of a government benefits program.
It is vital to recognize, though, that Medicaid planning strategies can be filled with risk if you don’t have the right assistance to guide you in their use. When trusts and other tools are improperly created or used, you can leave your estate vulnerable to Medicaid estate recovery efforts – which could result in the program agency seeking reimbursement from funds that you intended to leave to your heirs. To protect yourself against this kind of risk, you need to be able to rely upon a trusted Medicaid planning attorney in your area.
Fortunately, the Medicaid planning experts at the Fouts Law Group, LLC have the experience and knowledge that you need to ensure that your long-term care needs receive the financing help you deserve. We’re committed to protecting assets from nursing home costs, and can help to guide you in the creation and implementation of sound strategies that have been proven effective time and time again. If you want to ensure that you can qualify for the critical benefits you need while utilizing powerful asset protection strategies that help to safeguard your wealth, contact us at our online website today or give us a call at (404) 596-7520.