Medicaid Asset Protection/Long Term Care
Many families deal with the prospect of having a loved one enter a nursing home or long term care facility for the final years of life. Making the decision to admit a family member into a nursing home is always difficult and the costs of such care can be prohibitive if paid out of pocket. For that reason, most patients in nursing homes are receiving Medicaid Long Term Care benefits which pay for the services in the nursing home. In order to qualify for Medicaid, a patient must meet a resource and income test which sets a maximum amount of resources and income a person can have in order to have their care paid for by Medicaid. The resource and income tests are designed to make sure recipients of Medicaid Long Term Care benefits are poor and do not have funds or assets to pay for their own care. If a patient does not meet the requirements, they will be required to use their own funds to pay for their care until they have depleted their resources to the point that they can meet the two tests. There are a few exemptions or exceptions to the tests, most notably for a family home or the assets and income of a community spouse.
The current rules for Medicaid call for a five year “look back” period for donations made prior to entering a long term care facility. This means that someone entering a nursing home cannot simply give away their assets prior to entering and have Medicaid pick up the bill. Medicaid will penalize the patient for such activity and they will be barred from receiving long term care benefits for a period of time based on the value of the asset transferred. Depending on the amount, the period could be for many years; therefore, it is important to speak to a qualified attorney before making any decisions regarding such asset transfers.
In order to avoid the possibility of Medicaid depleting the assets of a family member, proper planning must take place long before a decision is made to enter long term care. Most families do not realize, or at least do not realize in time, that long term care will quickly eat away assets that were built over a lifetime. The rules regarding Medicaid Long Term Care are complex and have been changed many times over the years. With the ever increasing costs of healthcare, it is easy to see that more changes will be in store in the future. However, proper planning can avoid these problems and give families piece of mind when they are forced to make difficult choices.