Nursing home care can be extremely expensive and can quickly deplete the assets that one has worked hard for years to accumulate, leaving nothing to pass down to one’s heirs. Contrary to a widely held belief, that Medicare will help pay for nursing home care, the only help available beyond savings or long-term care insurance is Medicaid.
Medicaid, however, requires that an individual spend down assets before they can become eligible. Most individuals or their families will begin to transfer or sell for less than fair market value the individual’s assets believing that this will exclude them from being counted as assets for Medicaid eligibility purposes. DO NOT DO THIS! It is important that the individual or the individual’s family seek legal assistance before transferring any assets that could disqualify the client for Medicaid due to a five year look-back period imposed by the government that begins five years prior to the date an application for Medicaid is submitted. This look-back period could inadvertently disqualify an individual from receiving Medicaid benefits for a penalty period based on the aggregate amount of the disqualifying transfers divided by a divisor established by the state Medicaid program office.
A sound Medicaid plan can assist the family in preserving assets for a community spouse (the spouse who continues to live at home) or for the family to help assist in providing continued care and services not covered by Medicaid for the institutionalized family member. Without Medicaid planning, the cost of skilled nursing care would have to be privately paid until such time that a person’s assets are depleted to $2,000 or less, wiping out any funds to help with other costs or that could potentially be used by a community spouse.