Your mom needs to go into a nursing home. To many people, these seem like the worst words they could hear. These are, however, the words that millions of Americans will hear over the next few years as our population ages and life expectancies increase. As horrible as these words are, I suggest to you that there is another sentence that is even worse: Your mom doesn’t qualify for Medicaid.
As many readers are aware, Medicaid is a federal program that is available to pay for nursing home care for seniors. To qualify for Medicaid, however, the applicant must be Asick and broke, meaning he or she has medical need for long-term nursing care and has income and asset levels that fall below certain state standards. In 2019, an applicant must earn less than $2,313 per month, and all of his or her countable property must be worth less than $2,000. Certain things, such as a home and a vehicle, are usually Anon-countable, which means they don’t count against that $2,000 limit, but after the patient dies, the state has the right to go after these assets for reimbursement of any nursing home care covered by Medicaid. Everything else — checking and savings accounts, CDs, investment and retirement accounts, cash value on life insurance policies, and other real estate — will count against the applicant.
What does this mean for the average nursing home patient and his or her loved ones? It means the patient’s entire life savings will have to be liquidated and spent before he or she will be eligible for Medicaid to pay for nursing home care. It means that a lifetime worth of hard work and frugal responsibility will be burned up at the average rate of $6,300 per month. It means stress, worry and heartache for the entire family.
Please don’t think I’m all doom and gloom, though, because there are ways to avoid this unintended consequence of having a nest egg. Through careful planning with financial advisers, insurance providers and skilled attorneys, families can sidestep these devastating problems. Proactive planning must be done at least five years before nursing home care is needed, but it does not have to be overly complicated or confusing. And even if a medical emergency, whether it is a stroke, dementia, a fall or something else strikes unexpectedly, there are still solutions available to families that can preserve large portions of a nursing home patient’s money and property while still letting him or her qualify for Medicaid coverage. Through the surgically careful use of available strategies, including spending money in certain ways, making specific kinds of gifts, the purchase of certain investments, and establishing various types of trusts, families can protect their loved ones from the problem of having saved too well throughout their lives and, as a result, not being eligible for Medicaid.
So where do you go from here? Start with a trusted professional, whether that is an investment adviser, a tax adviser or a lawyer. Get referrals and recommendations on who in the community knows how to maximize the use of the strategies and solutions that are available to your family. Gather information. Ask questions. Put a plan together. Prepare yourself to receive that terrible news: Your mom needs to go into a nursing home. Maybe, if you’ve got the right team on your side, those really will be the worst words that you’ll have to hear.
Matt Fryar is an attorney with Crouch, Harwell, Fryar & Ferner PLLC in Springdale. He can be reached at 479-751-5222. The opinions expressed are those of the author.