If you don’t have a plan for your assets when it comes time for nursing home care, they can be at risk. Begin planning now for the expenses of senior living. The first step is to consider the role of Medicaid in paying for nursing home services.
WRCB’s recent article entitled “How to Protect Your Assets from Nursing Homes” describes the way in which Medicaid helps pay for nursing homes and what you can do to shield your assets.
One issue is confusing nursing homes and skilled nursing facilities. Medicare does cover a stay in a skilled nursing facility for convalescence. However, it doesn’t pay for full-time residence. For people who can’t afford to pay and don’t have long-term care insurance, they can apply for Medicaid. That’s a government program that can pay nursing home costs for those with a low income. People who don’t have the savings to pay for nursing home care and then require that level of care, may be able to use Medicaid.
For those who don’t qualify for Medicaid when they need nursing home care, they may become eligible when their savings are depleted. With less money in the bank and minimal income, Medicaid can pay for nursing home care. It is also important to remember that when a Medicaid recipient dies, the government may recoup the benefits provided for nursing home care from the estate. Family members may discover that this will impact their inheritance. To avoid this, look at these ways to protect assets from long-term care expenses.
Give Away Assets. Giving loved ones your assets as gifts can help keep them from being taken by the government when you die. However, there may be significant tax consequences and it also could render you Medicaid ineligible or getting assessed a huge penalty period. Likewise, once you have given something away, it is no longer yours. For example, if you give your home to your child and your child goes through a divorce or gets in a car accident and is sued, your house will also being going through those lawsuits.
Create an Irrevocable Trust. When assets are placed in an irrevocable trust, they can no longer belong to you because you name an independent trustee. The only exception is that Medicaid can take assets that were yours five years before you died. Therefore, you need to do this as soon as you know you’re going into a nursing home.
Contact an experienced elder law or Medicaid planning attorney to help you protect your assets. Make sure you are working with an elder law attorney who is qualified and experienced, such as a Certified Elder Law Attorney as certified by the National Elder Law Foundation. The more you delay, the less likely you’ll be able to protect them.
Reference: WRCB (Dayton) (Sep. 4, 2020) “How to Protect Your Assets from Nursing Homes”