Crisis Medicaid Planning – My Loved One Needs to Move to a Nursing Home Now!

by: Begley Law Group

by Marianne Johnston, Esq.

If a parent or spouse suffers a stroke or sudden debilitating injury and cannot live in their home, the family is faced with the high cost of long-term care.  With the daily cost of some long-term care facilities exceeding $500.00, the family may fear impoverishment if they did not plan in advance to protect assets.  It may, however, not be too late to preserve assets.  The nursing home resident will still have to apply for Medicaid and the family will need to engage in what I call Crisis Planning.

To be financially eligible for Medicaid, an individual’s countable resources cannot exceed $2,000.00.  What is countable?  Almost everything if a person lives in a nursing home.  Therefore, identifying what assets are not countable for a nursing home resident is easier.  The following assets do not count toward the $2,000.00 limit:  the primary residence if a spouse resides in it; one vehicle; prepaid funerals for the applicant and their spouse; term life insurance; and whole life insurance with a maximum face value of $1,500.00.  If married, the healthy spouse, known as the Community Spouse, is allowed to keep one-half of the couple’s assets up to a limit of $154,140.00 in 2024.  All other assets need to be “spent down” to the $2,000.00 limit.  This does NOT mean the funds have to be spent on the cost of the nursing home.

In this situation, the purchase of a Medicaid-Compliant Annuity by the applicant’s spouse or by an unmarried applicant may be a useful tool in hastening eligibility for Medicaid and protecting assets.  An Annuity must satisfy five requirements to be considered not countable by Medicaid.  The Annuity must:

  1. be irrevocable;
  2. be non-assignable;
  3. be actuarially sound (has been interpreted as having a term shorter than the annuitant’s life expectancy);
  4. provide for equal monthly payments; and
  5. name the State Medicaid Agency as primary beneficiary up to the amount the State pays out in benefits.

A Medicaid-Compliant Annuity is not considered a countable asset but rather an income stream for the owner.  If purchased by a Medicaid applicant’s spouse, the couple’s countable assets are spent down and the income generated by a Medicaid-Compliant Annuity does not have to be spent on the institutionalized spouse’s long-term care.  For a single applicant, the purchase of an Annuity can be used as part of a gifting strategy.  With a gift/Annuity strategy, the applicant transfers assets that result in Medicaid imposing a penalty.  The penalty delays an applicant’s eligibility for benefits.  The payments from the applicant’s Medicaid-Compliant Annuity, however, pay the nursing home during the penalty period.  Such a strategy can preserve approximately 50% of the assets of a single Medicaid applicant.

         Consult Begley Law Group if your family is faced with nursing home costs.  Remember an attorney advocates for the client.  In this stressful situation, having an attorney looking out for the best interests of yourself and your family is crucial