Keeping Some Assets and Qualifying for Medicaid

Medicare is not covering many long-term care costs, so Medicaid is what individuals have left to fill in the gap. Medicaid is responsible for 40% of the country’s long-term spending. To qualify for Medicaid, you generally can’t have more than $2,000 in cash and investments plus a house and a car.

States vary in their Medicaid qualification standards because they are only required to work within federal rules, and several different interpretations follow from those rules. Many states are cutting back on Medicaid funding or raising the requirements to qualify.

The Wall Street Journal provides several suggestions for how you can qualify for help while still maybe preserving some assets:

• Get a professional opinion to find out what the current laws are in your area and if they are changing.
• Give your house, but hold onto cash. If you make a gift within five years of applying to Medicaid, there is a waiting-period penalty. You could transfer your house to your children if you need to move into a nursing home, and then you can use your cash to pay for your care during the waiting period.
• Fill the five-year gap with insurance. You could buy long-term-care insurance to cover the waiting period.
• Create a trust. If properly drafted, you can set up an irrevocable trust effectively.

See Kelly Greene, Medicaid Gets Harder to Tap, The Wall Street Journal, Mar. 30, 2012. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.