Listening to a radio financial talk show a caller says, “My 80-year-old mother doesn’t have much money, but she just inherited some money.” How can we protect that money in case she has to go into a nursing home and on Medicaid?”
What’s wrong with this picture? I guess most people will say nothing is wrong. After all, the caller is asking a question most people would like the answer to. Who doesn’t want to protect their … Ah, their mother’s money?
Again I ask, what’s wrong with this picture?
Medicaid law has long sought to limit the ability of an individual to divest assets in order to meet the resource level required for Medicaid nursing home eligibility. States are required to withhold Medicaid payment for various long-term care services for individuals who dispose of assets for less than fair market value within five years of applying for benefits.
The asset transfer penalties apply if you give away income or assets and then need to apply for Medicaid long-term care benefits either in a nursing home or in your own home. The penalties apply if the transfer was made by you, your spouse, or by someone else acting on your behalf. There are some exceptions to the transfer penalties that may apply depending on your particular situation.
The transfer penalty law has a five-year look-back and penalty start date rules that encourage individuals to plan long in advance of incapacity. To best protect their assets, individuals need to plan a full five years in advance of application for Medicaid long term care benefits. When you plan well in advance of the need for care, you have lots of options available to you.
Marshall Elder and Estate Planning Blog
Do you really want to be in a nursing home that accepts Medicaid? Have you considered long term care insurance?
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