Protecting Assets and Qualifying for Medicaid

Posted on: Feb 27, 2019

In our last article, Current Medicaid Standards for Washington, we listed the requirements that must be met in order to qualify for Medicaid Long-Term Care government benefits as of January 2019 for Washington Residents. These benefits pay for Long-Term Care costs. There are strict financial conditions that must be met in order to receive these benefits. Unfortunately, many people mistakenly believe that you must spenddown all your assets in order to qualify, which simply isn’t true. 

What’s at Risk

Long-Term Care is expensive. One month at an Assisted Living Facility can cost $5,000 plus each MONTH. Care at a Skilled Nursing Facility often is more than $10,00 each MONTH! When you consider that 20% of seniors will need Long-Term Care for 5 years or more, care costs easily can outstrip a person’s life savings.

If you qualify for Medicaid, the state may have alright to recoup the costs of your care after your death through a lien or a claim of estate recovery. But, you should know that the state’s lien or claim to estate recovery can be avoided through Medicaid Asset Preservation Strategies®.

Options for Paying Care Costs

Private Pay

Paying for Long-Term Costs out of pocket is daunting, though for some wealthy individuals it may not be an issue. Or, if Long-Term Care will only be required for a couple of months, Medicaid Asset Preservation Strategies® might not be needed.

Long-Term Care Insurance

Long-Term Care Insurance is another option to cover care expenses, but there are restrictions to qualify and it can get very expensive. For more information, check out our article Do I Need Long-Term Care Insurance.

VA Aid and Attendance

Veterans Affairs offers a benefits program for veterans who served during wartime and their spouses. This program has somewhat similar restrictions on income and resources like Medicaid. For more information about VA Aid and Attendance or other military benefits you might qualify for, check out our article What is the Aid and Attendance Pension for Veterans.

Medicaid

We go into detail about Medicaid standards in our article Current Medicaid Standards for Washington. Medical and financial requirements must be met in order to qualify. A couple can have between $55,547 and $126,420 total cash assets and qualify for Medicaid. A single person can have only $2,000 total in countable assets. There are also penalties for gifting money in the five years before applying for Medicaid.

What does this all mean?

Without some kind of assistance, paying for Long-Term Care will deplete assets in a relatively short period of time. Qualifying for government benefits requires a single person’s resources to be at the poverty level, and Long-Term Care insurance or private pay aren’t always viable options.  If you do qualify for Medicaid, you could lose your home to the state’s lien.

Couples can keep more money than singles are allowed. Nonetheless, without good planning, couples too will find their lifesavings depleted and at risk of losing their home.

So what can you do?

There are options! The following are just some of the Medicaid Approved strategies for saving assets and qualify for Medicaid Long-Term Care government benefits.

WARNING: These Medicaid Asset Preservation Strategies® are complex and should not be attempted without the services of a well-qualified Elder Law Attorney who is well-versed in Medicaid’s rules.

A Medicaid Single Premium Immediate Annuity

This strategy works best for couples. If one spouse needs care, but the couple has too much money to qualify for Medicaid, they can purchase a Single Premium Immediate Annuity (also known as a SPIA).

A SPIA is an irrevocable annuity that typically pays out in equal installments over a period of five years to the well spouse and Medicaid does not count the money as a resource! Once a SPIA is purchased and the couple is considered within resource limits, the ill spouse can immediately qualify for Medicaid.

 The reason that a SPIA is a Medicaid approved annuity is because the state is the contingent beneficiary if the well-spouse doesn’t survive the five-year term of the annuity.

Exempt Spend Down

DO NOT TRY THIS ON YOUR OWN. Medicaid’s five-year look back examines purchases or gifts over $300 within the five years of your application for Medicaid benefits. There are certain purchases that are allowed without incurring penalty. Consult with an Elder Law Attorney before spending any large amounts of money ahead of apply for Medicaid.

Purchase Exempt Resources:

  • An Irrevocable Burial Plan
  • Upgrading to a new car
  • Upgrading to a new house

Purchase Exempt Professional Services:

  • Legal Fees
  • Home Repairs or Improvements
  • Care Management Fees
  • Accountant Fees

Exempt Transfers

Giving assets away when applying for Medicaid does incur penalties, except in these specific circumstances:

  • Transfers more than 5 years prior to applying to Medicaid
  • Transfers to any disabled person (not including your home)
  • Transferring ownership of your home to your spouse
  • Transferring ownership of your home to your disabled child
  • Transferring ownership of your home to a sibling with equity interest
  • Transferring ownership of your home to your child IF they provided in-home care to you and lived in the home with you for at least two years immediately prior to obtaining Medicaid benefits with no private pay to any facility in between.

These are just a few ways that you can preserve assets when applying for government benefits. Each person’s circumstances are unique. Contact the experienced legal team at Elder Law Group by calling 509-468-0551 to learn the best options for your situation.