Kerry Hettinger Michael Hettinger R. Richard Hanson   Kalamazoo: 324-2000 Battle Creek: 968-5000 Three Rivers: 278-7800 Sturgis: 659-6161 Coldwater: (517)278-6800 Dowagiac: 782-2500 Fax: 344-3601 Statewide: 800-294-5055

Medicaid Planning for Nursing Home Care
(Based on requirements for the year 2001)

Not all persons requiring nursing home care need financial assistance from public programs such as Medicaid. If a person or couple have enough income producing assets (such as investments, rental property, etc.) to cover the cost of nursing home care without depleting their assets, financial assistance will not be necessary. Also, if the person has adequate long term care insurance, Medicaid planning may not be necessary. However, for those persons with smaller estates and without any long term care insurance, Medicaid may be the only alternative for paying for nursing home costs.

This brief overview of Medicaid planning is not intended to be legal advice. The following information is not exhaustive. Persons seeking Medicaid planning should contact this office, the area Family Independence Agency, or another person qualified to give advice.

Generally, a Michigan resident who is age 65 or older, or disabled, may qualify for Medicaid if the financial criteria for asset and income limitations are met. The asset limit is $2000 for an individual. Assets taken into account for the asset limitations are called countable assets. Only the assets of an adult and his or her spouse are counted. Examples of countable assets include: cash, stocks, bonds, land, IRAs, and pension plans. Basically, anything that is not exempt is a countable asset. Examples of exempt assets include: a homestead and adjoining land, household furniture, one vehicle, income producing real estate, and bona fide loans. This means that a person could have $2,000 in cash, a home and furnishings, a car, and still qualify for Medicaid. Regarding income limitations, a single person's gross income cannot exceed the monthly private pay rate for skilled care in the nursing home in which he or she resides by more than $20.

For married couples, the asset and income limitations are different when one spouse goes into a nursing home. The spouse that stays home, called the community spouse, is allowed to keep certain assets in order to support himself or herself. Generally, this amounts to one-half of the couple's countable assets with the minimum that the community spouse can keep being $17,856 and the maximum being $89,280. The nursing home spouse is still only allowed to keep a maximum of $2000 in countable assets. The couple must "spend-down" the excess money before they can qualify for medicaid. For example; a couple owns a home, a car, and has $100,000 in savings. The home and the car are not counted as assets. The $100,000 is a countable asset and the community spouse is allowed to keep one-half: $50,000. The nursing home spouse is only allowed to keep $2,000 so the couple needs to spend $48,000 before the nursing home spouse can qualify for Medicaid.

The $48,000 is a countable asset. Any countable asset can be converted to an exempt asset. This means that the $48,000 can be spent on improvements to the home, paying a mortgage, purchasing an annuity, purchasing a vehicle, etc. When the nursing home spouse only has a maximum of $2000 in countable assets (assuming all other qualifications are met) he or she can qualify for Medicaid.

Any person who disposes of countable assets for less than fair market value for the purpose of qualifying for Medicaid has made a divestment. A common situation is giving countable assets away to family members. There is a penalty for divesting assets if made within 36 months (60 months in certain situations) of applying for Medicaid. The penalty is a period of disqualification from Medicaid based on the amount of the divestment.

With proper estate and Medicaid planning, a couple's countable assets can be substantially increased prior to the date that the assets must be declared, called the "snapshot" date, so that the community spouse is allowed to keep a higher amount of assets. Generally, the snapshot date is the date that the nursing home spouse first went into the hospital or nursing home for an extended stay. After the snapshot date, the amount of countable assets are then converted into excluded assets to lower or eliminate the spend-down amount. For couples, there is an excellent planning opportunity to reduce or eliminate the spend-down amount if their home is in a revocable trust prior to the snapshot date. Since the snapshot date is virtually unpredictable (you cannot predict when you will fall and break your hip, or have a heart attack, etc.), it is very important to transfer the home into a revocable trust as soon as possible.

As you can see, Medicaid planning can be quite advantageous if done properly. It is only one part of a plan to provide for a person and his or her loved ones upon disability or death. A properly drafted estate plan allows the individual or couple to decide ahead of time who will care for them or their children, who will manage their assets, what medical treatment will be administered, etc., when disability occurs. It also allows them to decided who will receive their assets, when they will receive them, and who will raise their children, when death occurs. Depending on the size of a couple's estate, hundreds of thousands of dollars can be saved in estate taxes, allowing the money to go to loved ones instead of the government. Estate planning is just that, it is a plan. It is your plan.

Call for a free consultation.

Disclaimer