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Asset Protection and Medicaid Planning

Do you know someone in a caregiving situation? A relative, a neighbor or a friend? Families with a member who is receiving care at home should be consulting with an elder law attorney. Here’s why.

Under the Medicaid law, a person is allowed to transfer between six thousand ($6,000) and eight thousand ($8,000) dollars per month out of their name (either to children or to an Irrevocable Medicaid Trust, but not to a spouse). The exact amount you are allowed to transfer depends on what the State says is the average cost of nursing home care in your community (see chart on page 2). These transfers are permitted at any time, even within the three years prior to admission to a nursing home.

For example, let’s say New York State provides that the average cost of care in your area is seven thousand, five hundred ($7,500) a month and someone you know is in a situation of failing health. It would be prudent, in such a case, for us to meet with that family and to assist them in transferring the seven thousand, five hundred ($7,500)a month they are allowed to move. Now, let’s say they are at home for a year and then have to go into a nursing home. Well, you would have moved twelve months worth of transfers, or ninety thousand ($90,000) dollars. The family gets to keep this money. Medicaid cannot touch it and the nursing home cannot get it. Our family is ninety thousand ($90,000) to the good.

Now, let’s say they have one hundred and fifty thousand ($150,000) left when they have to go into the facility. Does the nursing home get that money? Not if their family has an elder law attorney! Under the Medicaid transfer rules we can use a technique called “half-a-loaf” planning and keep half of what’s left, or another seventy-five thousand ($75,000) dollars. We are allowed to transfer half of the one-hundred and fifty thousand ($150,000) so long as we spend the other half on the person’s care in the nursing home. And we all know what half-a-loaf is better than, right?

So, by consulting with an elder law attorney, our family can keep the ninety thousand ($90,000) they moved the year before entering the facility and the half of the one hundred and fifty thousand, or seventy-five thousand ($75,000) for a total of one hundred and sixty-five thousand ($165,000). The nursing home only gets seventy-five thousand ($75,000).

The Medicaid application, once completed, is a two inch thick ream of paper including bank and brokerage statements for the past three years, income tax returns and a host of other personal information documentation.

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