Planning for Medical Assistance
Elder law is protecting assets from medical assistance liens, lawfully transferring assets, and asset reduction strategies. The majority of people who do not have long-term care insurance will most likely end up having to use Medical Assistance when they reach their later years to pay for nursing home care. In order to qualify to receive Medical Assistance, as a general rule, your assets must not exceed more than $3,000 (there are several exceptions). As a result, it is common for people to have to spend down their assets to pay privately for nursing home care until they have reached the $3,000 mark before Medical Assistance will start covering the costs.
It is important that you are planning for the possibility of using Medical Assistance significantly prior to the time, but at a minimum, at least five years prior to when you anticipate needing to use it. The main reason is because there is a five-year look back period on the transfer of assets. Therefore, if you transfer your lake home to your children when you are 75, and you go into the nursing home at age 76, the transfer of your lake home will be considered an uncompensated transfer for purposes of Medical Assistance. An uncompensated transfer will make you ineligible for Medical Assistance unless you are able to undo the uncompensated transfer. Depending on the facts, not every uncompensated transfer can be unraveled to make you eligible for Medical Assistance.
On the flip side of an uncompensated transfer is when a person sells an asset that is not required to be sold that then makes that asset available for purposes of the spenddown. Take for example, the following hypothetical: Jill and Chris are married, in their 70’s, and live together in a home that does not have a mortgage. Chris has to go into a nursing home unexpectedly. Jill is in a panic and quickly puts the house on the market for sale and sells it as she does not want to deal with maintenance on her own. If Jill had not sold the home, Jill could have continued to reside there without any consequence during her lifetime. However, since Jill sold the home, some of the net proceeds are assets that then must be used for a spenddown, which reduces the amount of funds that Jill has to spend.
Planning for medical assistance is extremely complicated. One of the reasons why it is complicated is because the law changes approximately every six months as to the amount of exemptions. While it is not possible to know with certainty the exact facts that will be prevalent at the time a person needs to utilize Medical Assistance for the cost of nursing home care, most likely, planning for it sooner rather than later, will save the estate significant sums of money.
Spangler and de Stefano, PLLP assists individuals with planning for medical assistance to avoid uncompensated transfers and medical assistance liens.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.