The last few months have been hard for you. You’ve been watching your parents get older, you lost your dad recently, your mother has been diagnosed with Alzheimer’s, and although you’ve been caring for her you’re no longer sure that’s an option.
You begin to look into nursing homes but you’re not quite sure where to turn next.
The next step is to qualify her for Medicaid. Over the last ten years, however, that has become much more difficult.
In many instances, elderly individuals have too many assets and do not qualify; yet, they cannot afford a nursing home on their own. They are then forced to “spend down” their money just to meet the Medicaid requirements.
What’s a “Spend Down”?!
If your mother’s income is greater than the Medicaid allowance, the “spend down” process allows her to claim that she is “medically needy.” She can then “spend down” or subtract medical expenses from her income which can assist her in qualifying for Medicaid.
Many people, however, attempt to “spend down” their assets without knowing the law.
Spending Down the Wrong Way Can Hurt You
Since 2006, any person applying for Medicaid benefits must disclose all financial transactions from the past 5 years (look-back period). Any transfers of assets (selling a home, car, or other property) that took place during this look-back period must have been for at least fair market value.
If it is found that the applicant made a transaction for less than fair market value, the applicant would be subject to a 20-month penalty from the date of their application for Medicaid.
For example, if your mother “sold” her house to you for $5,000, she would be subject to the 20-month penalty, therefore, she would be ineligible for Medicaid benefits for 20-months and would have to find other ways to pay for her long-term care needs.
This can be confusing. So what can you do now?
—See 42 U.S.C. § 1396p(c)
It is never too early to start planning for the future. Contact your Estate Planning Attorney and create your own estate plan to help avoid Medicaid altogether in your future.
Your Estate Planning Attorney can help with a testamentary will, a living will, and powers of attorney, and can advise you on whether a trust would be in your best interest.
If you feel you will need to apply for Medicaid within the next five years, it is still not too late. In many cases, a trust can be set up to avoid the Medicaid Asset Transfer rules. An Estate Planning or Elder Law Attorney can help you decide what, when and how to spend your assets in order to qualify as well as help you decide when is the best time for you to apply for Medicaid.
–Authored by Kayla R. Wimberley, J.D.,
Matthew Harris Law, PLLC – Estate Management Division
1001 Main Street, Suite 200, Lubbock, Texas, 79401-3309
Tel: (806) 702-4852 | Fax: (800) 985-9479