Medicaid Planning
We've received several e-mails recently regarding Medicaid planning. Medicaid pays the bills for many seniors in nursing homes right now. We'll do some homework and add more information on our site.
The Wall Street Journal (Sunday Edition) gives us some of the changes.
The Deficit Reduction Act, which President Bush signed on Feb. 8, changed the rules for qualifying for Medicaid assistance for long-term care. That means people could find it harder to leave their assets intact for their children and still get government help with the costs of long-term care.
The new law tightens rules involving "Medicaid planning." Currently, individuals become eligible for Medicaid after using up all but $2,000 of their cash and investments. (There are exceptions that vary from state to state, but you generally get to keep your house and car.) One way of reaching that threshold -- without exhausting your savings -- is to transfer assets to someone else, often your children, before entering a nursing home.
Wise Owl
Here's an additional article explaining some of the Medicaid changes.
Medicaid takes into account any substantial gifts of assets the applicant has made within five years. If the applicant is eligible for Medicaid in part because of those gifts, before Medicaid will pay any benefits, that person must contribute an amount equal to those gifts, up front, toward their nursing home care. For instance, an elderly client gifted $100,000 to his children in 2002 and then later applies for nursing care coverage under Medicaid in 2006. If the $100,000 reduced his assets enough to qualify him for Medicaid, the new law would require that he pay the first $100,000 of his care, out of pocket, before Medicaid benefits would kick in. For clients already on the Medicaid rolls, or who applied for coverage before Feb. 8, the new laws will have no bearing on their status. However, elderly clients currently using the gifting strategy to attempt to qualify for Medicaid will have to take a hard look at revising their plan.