| There are a few things you can do using Medicaid | | | | Annuity: How do you guarantee that your spouse has |
| planning to rearrange finances and legally shelter your | | | | enough money to live on if you have to go to a nursing |
| assets from the state. The strategies can be very | | | | home? |
| complicated so you may want to consult an elder law | | | | When the state is considering eligibility for Medicaid, a |
| attorney to help you with the specifics. | | | | couple's assets are pooled together. Your healthy |
| You would be accomplishing a few goals in Medicaid | | | | spouse is generally given a resources allowance |
| planning including: | | | | amount to one-half of the assets. As you can imagine, |
| 1. Sheltering countable assets | | | | this may not be much money over the long term |
| 2. Preserving assets for your heirs | | | | especially if your spouse needs to take time off of |
| 3. Providing for your healthy spouse | | | | work. |
| Lets examine each strategy in detail | | | | If you're married, an annuity can help protect your |
| Sheltering your countable assets: The total value of | | | | healthy spouse. An important loophole in the law is that |
| your countable assets(including your income), | | | | your healthy spouse can use jointly owned countable |
| determine whether you are eligible for Medicaid. Under | | | | assets to buy a single premium immediate annuity to |
| federal guidelines, each state has a list of exempt | | | | benefit himself or herself. By doing so, you effectively |
| assets. This list usually includes items like the family | | | | convert countable assets into an income stream. Each |
| home, prepaid burial plots and contracts, term life | | | | spouse is then entitled to keep all of their own income |
| insurance, and one automobile. | | | | instead of pooling assets. The end result is that the |
| You can rearrange your finances so that countable | | | | institutionalized spouse can more easily qualify for |
| assets are exchanged for exempt assets and thus | | | | Medicaid. |
| made inaccessible by the state. | | | | Medicaid Planning Risks |
| For example, you can exchange spending your | | | | You should be aware of look-back periods, estate |
| savings on nursing home bills for; | | | | recoveries, and possible disqualification for Medicaid. |
| 1. paying off the mortgage on you family's home | | | | When applying for Medicaid, the state has the right to |
| 2. prepay for burial arrangements | | | | look back at your finances for a period of months |
| 3. make home improvements | | | | before the application date. Generally, there is a |
| 4. purchase one car for your healthy spouse | | | | 36-month look-back period for transfers of countable |
| Irrevocable trusts: Why not simply liquidate all your | | | | assets, along with a 60-month lookback period for |
| assets to pay for nursing home care? After all, won't | | | | similar transfers into irrevocable trusts. Countable asset |
| Medicaid kick in after you have exhausted all of your | | | | transfers for less than fair market value made during |
| assets? The reason is this: You want to help out your | | | | the lookback period will commonly result in a waiting |
| loved ones financially. You would rather leave | | | | period before you can start to collect Medicaid. For |
| something to them, rather than to strangers. | | | | example, if transferring your house to your children a |
| Using an irrevocable trust can help you leave | | | | year before entering a nursing home will make you |
| something for your loved ones. (We use the word | | | | ineligible for Medicaid for quite some time. |
| irrevocable because you can't come back and change | | | | Also, understand that Medicaid planning is more |
| it later or decide to end it) Property placed in an | | | | effective in some states than others. |
| irrevocable trust will be excluded from your financial | | | | In most cases the answer is no. There are two |
| picture, for Medicaid purposes. Anything that you place | | | | reasons for this. First, unless you fall within an |
| into the trust (and possible income) can be sheltered | | | | exception, your mother could lose Medicaid eligibility for |
| from the state and preserved for your loved one. | | | | five years by transferring the house to you. The |
| More often than not, the trust must be in place and | | | | exceptions would apply if you were disabled or if you |
| funded over a specific period of time for it to be an | | | | lived in the house and provided care to your mother |
| effective Medicaid planning tool. | | | | for the two years before you went to a nursing home. |