What’s With This 5 Year Medicaid Rule?

--

Many people understand the general rule that if you own more than $2,000 of assets (there are definitions of "assets") when you enter a nursing home, then you will not be eligible for Medicaid, and you must privately pay the entire nursing home expense, which in every state is many thousands of dollars monthly.

However, most people, if they must enter a nursing home for long term care services, would prefer to have Medicaid cover this expense, rather than have to pay for it out of their own life savings. But in order to qualify for Medicaid, you have to meet your state's definition of "poor."

For starters, when you enter a nursing home and apply for Medicaid, you can have no more than $2,000 of countable resources. Countable resources include things like money in the bank, investments, savings bonds, retirement accounts, real estate (not your home), and interests in a business or LLC.

Some uneducated folks think they can get around this rule by "quietly" transferring assets out of their name just prior to going into a nursing home. But the Medicaid Manual's rules are quite extensive - making it impossible to get around the rules.

When one enters a nursing home having transferred assets out of their name at least 60 months prior to applying for Medicaid, then it is likely that those assets are, as people say, "protected."

It's much trickier if assets are transferred within the 60 months prior to entering a nursing home.

If you are considering transferring assets to start the five-year clock ticking, you'll likely consider whether you should transfer assets to individuals or trusts. Most people who get educated on the subject tend to transfer assets to particular types of trusts, for two reasons: (1) control reasons; and (2) tax reasons (income tax and capital gains tax).

If you take one item away from this discussion, it's that there are rules which make it very difficult to avoid losing your life savings and home if you enter a nursing home, but by planning ahead (ideally, at least five years before entering a nursing home), you can protect a very large portion of what you own for yourself and your loved ones. But know that the rules are complicated and you need good legal help - ideally, from an attorney who is well-versed on the ins and outs of your state's Medicaid eligibility rules.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Estate Planning Attorney
Phone: [phone]

[darlenedady]

I was in special Ed class all my life. I have low syndrome and had a couple of jobs that didn't last. I am not fast in doing anything .having to be fast in anything thing or a job, my mind goes blank on me. Sometimes, I feel so stupid. But I do try so hard to do things . I enjoyed helping people when I can. I have medicaid all my life. They said that when I turned 65, I will get medical with medicaid . There are times when I get confused with all the different paperwork. Thank you for listening to me. Take care, everyone ❤😊

[whittkatt]

Nursing homes are, unfortunately, more likely by FAR, to be expensively horrible places to put a loved one. Regardless of their pamphlets, mission statements and things they “officially state” as their rules. Short staffing, poorly run, and uncaring, unvetted people who are rushed, rough and unable to give the care they would like to give, at best, and harsh, cruel and uncaring, or even abusing at worst, are *the norm.”
That you pay through the nose for this type of “care” is flatly disgusting.
If you are forced to have a person you love in care, because yes, at times you simply can’t do the care on your own, then visit daily. Be alert, be a pain in the staff’s ass by asking questions and being proactive. I say this as a nurse, working in the field for over 26 years.

[vernonsheldon-witter]

Word from an old RN-there is a advantage in taking care of people at home.

[passthetunaporfavor]

A system designed to extract your last dollar and dignity.

[debbylou]

Our healthcare system isn’t broken. Allowing insurance companies to run things ruined it. Years ago if you were married and you both worked, the overlapping insurance meant you were covered 100%. You didn’t get money back, between the two policies you just didn’t have a gap out of pocket. This is how evil they are. I worked, my insurance covered 80% of my healthcare and had spousal benefits with the same coverage. Husband worked and his insurance was almost identical….80% paid for both of us. In fact we were over insuredThen they did something I think was illegal (basing that thought on conglomerates like Bell Telephone was doing). They decided that you would both work, and get insurance. The NEW policy is like this. One policy pays 80%, leaving you with the 20%. the 2nd one will pay only part of that remaining cost. This happens so they can take your money

[mdavis]

Most people……most people don’t even know this information. I’m getting a crash course learning experience in this mess.

[millerscorner]

My Mom had to go to a nursing home for 'rehabilitation' after a fall. Two months later, we brought her home to find that 'they' had not told us of the bed sores on her back and both of her heals had peeled off from the bone. Never again will we allow her to go into a nursing home; ever. Now, we cannot leave her alone which means someone has to always be here, but better that then to have them kill her off. Not all nursing homes are like that, but there are in this little town. The waiting list in a very long one in this state and no one can choose a nursing home unless, of course, they are wealthy and can pay off those in charge. It's a system to defraud the elderly and their heirs and it needs to be stopped. I've seen what these nursing homes do to people and how people lose all dignity in those places. My father-in-law had to go to one when he had stage four cancer and when we went to visit him, he was so darn sick from a urinary tract infection that we didn't even recognize him. It was caused by the catheter which apparently wasn't properly cleaned. It sickens me to know that people suffer at the hands of others like that. Look what Cuomo did to the elderly in NY - he has blood on his hands as he purposely killed off a lot of Moms and Dads.

[davidz]

Thank God for people like you. I need to start planning for my aging parents. I had no idea how screwed we're going to be.

[susananderson]

I had already decided I'd take my Mom home, and care for her myself. I did that while nursing a 3 yr old and a 4 month old for 9 plus years.

[bitpickersplace]

Yea, we wanted to buy our mom’s home after she passed away. Medicaid said we had to pay full market value. The home needed a lot of work but that didn’t matter.

We let it go and it went into auction and the home was sold for penny’s on the dollar.

That was the pits.

[DennisMathias]

After reading the comments again, I don't think you realize how much you helped people wrap their minds around this. We as a society have to figure out something better than this.

[SuperSlik]

I’m 63, healthy for now. I’d rather just end it when time comes

[theresehill]

If you live in Michigan, look into what's called a." Lady Bird deed which protects the home from Medicaid seizure.
Its quite new and we are only one of 4 states.that have this.
I recently did this

[doug.ritson]

You should touch on the gifting rules and how they impact Medicaid.

[MichaelWest-rl]

24 hour private care, 375 days a year at a meager $15/hr comes to $131, 000 per year. I have known dementia patients who need that kind of care for multiples of years. The longest was 11 years. Add to that groceries, utilities, medications, and day to expenses incurred in your own home and pretty soon even the most robust retirement account is wiped out. It usually falls to one child to suspend their life and try to do the impossible for mom or dad for years. There are no easy answers and different diseases have differing levels of cruelty. Estate planning is essential before these times occur. I had a friend with no immediate family who just stopped eating as his disease progressed and finally got admitted to hospice if he would private pay. He smiled the day before he died and said, “if I can die before next week, I’ll save $8000.” He always loved a bargain. He was lucky to have enough in the bank AND a disease that allowed him to do that.

[gglen]

Nothing like trying to wade through 25 pages of legalese when you start your cognitive decline.

[lindseysturkie]

I've warched many of your "lessons ". You provide a wealth of information simply for the cost of taking time to watch your videos. I'm sure a person would need an actual in personal attorney to work through the details but you certainly create a fantastic starting point.

[donnaallgaier-lamberti]

I live in Michigan. The first thing I did after my husband's diagnosis of early cognitive decline was to get our Family Trust updated and a guardianship for him in place. We protected what assets we could. I was aware of the five-year rule. We are a second marriage and between us we raised and educated four children between us in our first marriage. My husband lost all his first marriage assets in his divorce so we basically started over again at age 46 and 50. We are now spending down his assets first (those things in his name - his IRA, his pension, his truck while preserving my assets with the assumption I will live longer.) This is the best we can do.

[debkincaid]

So glad I found you. You break this gobbledegook down in layman's language so it's comprehendible. Thanks!

[ralphgreenjr.]

When my Mother turned 89 it was time to find a constant care home for her. We tried to take care of her in our home as best we could, but with the onset of dementia we could not provide the care she needed as I worked out of state and my wife was the director of nutritional services at a nursing home. We were able to get her into the facility my wife worked at. My Mother was a resident there for 10 years until she passed at age 99 and 6 months. My wife checked on her daily, I saw her every Sunday, and I made every care conference. Being directly involved with the care your loved one is receiving assures that your loved one receives professional loving care. We will always be grateful to the staff that guided us through the process. It was a God send.