How to Protect Your Assets from Nursing Home Costs with Medicaid Planning

As you or your loved one age, the possibility of needing long-term care, specifically skilled care in a nursing home, becomes a real consideration. However, the expenses associated with long-term care can quickly deplete your assets if not properly planned for. In North Carolina, Medicaid offers coverage for nursing home care, but qualifying for these benefits involves meeting strict asset and income requirements. 

Many seniors and their families are concerned with how they will pay for nursing home care and what happens when they can no longer afford it. Questions about what happens to their hard-earned savings and retirement when they need long-term care and whether any of these assets can be saved when they apply for Medicaid are also common. McIntyre Elder Law can guide you in safeguarding your assets from nursing home costs while also ensuring Medicaid eligibility.

Understanding Nursing Home Medicaid Eligibility

Medicaid serves as a crucial lifeline for those requiring nursing home care by providing financial assistance when a person can no longer afford to pay privately. Eligibility for Medicaid benefits is strictly regulated and varies from state to state. In North Carolina, qualifying for benefits depends in part on meeting specific asset and income criteria. As of 2024, the asset threshold for a single individual stands at a modest $2,000. This means that individuals seeking Medicaid support must ensure their countable assets fall below this limit to qualify. For married couples where one spouse necessitates nursing home care, the asset threshold is slightly more lenient at $3,000. 

It’s essential to note that these asset limits are subject to change, emphasizing the importance of staying informed about current Medicaid policies to plan effectively for long-term care needs. Medicaid policy differentiates between what it calls “countable” and “excluded” assets. Some examples of assets subject to Medicaid’s scrutiny include cash, investments, real estate, and other valuables. Therefore, strategic advanced planning with an experienced estate planning lawyer becomes paramount in navigating Medicaid eligibility while safeguarding personal resources from being exhausted by a nursing home stay.

Ways to Protect Your Assets and Estate

While the cost of nursing home care is rising, there are strategies families can use to take advantage of Medicaid benefits without spending the entirety of their savings and retirement on care first. A skilled elder law attorney can offer advice whether you are an individual, a married couple, or looking for a way to protect your parents’ assets from nursing home costs.

Basic Spend Down Strategy to Qualify for Medicaid

One common strategy used by many families with a loved one going into a nursing home is referred to as a Medicaid spend down. A Medicaid spend down refers to a process where individuals with income or assets exceeding the Medicaid eligibility thresholds can still qualify for benefits by “spending down” their excess resources on medical or long-term care expenses.

First, it involves using one’s surplus income or assets on allowable expenses, such as medical bills, prescriptions, or nursing home costs. Sometimes, this is enough for an individual’s resources to fall below the Medicaid asset or income limits. Additionally, an individual or married couple can use countable assets to purchase excluded or non-countable assets. Non-countable assets include a car, a personal residence, personal property, and funeral expenses. Of course, each of these assets must meet Medicaid’s specific criteria for being excluded.

Individuals can become eligible for Medicaid coverage by effectively reducing their countable resources through qualified expenditures. However, it’s crucial to strictly follow Medicaid’s guidelines and regulations regarding spending down to ensure compliance and maximize benefits. Consulting with an elder law attorney or Medicaid planning specialist can provide invaluable guidance in navigating the complexities of Medicaid Spend Down and optimizing eligibility for long-term care assistance.

Medicaid Asset Protection Trusts and Advanced Planning

In addition to traditional spend-down strategies, with proper advanced planning and the guidance of an estate planning lawyer, there may be additional options available to protect assets prior to needing long-term care. To qualify for Medicaid while preserving your assets, consider the following strategies:

  1. Irrevocable Trusts: Establishing an irrevocable trust can help protect assets from nursing home expenses. After a specified period, typically five years, assets placed in an irrevocable trust are no longer considered countable for Medicaid eligibility purposes.
  2. Medicaid Asset Protection Trusts: Similar to irrevocable trusts, asset protection trusts shield assets from nursing home costs while allowing you to retain some control over them. Consult with an elder law attorney to determine the best trust option for your situation.
  3. Long-Term Care Insurance: Investing in long-term care insurance can provide a stream of income to cover nursing home expenses without depleting personal assets. However, it’s essential to purchase a policy early as premiums increase with age.
  4. Annuities: Annuities can be used as a strategy to convert assets into a stream of income, making them exempt from Medicaid asset calculations. However, Medicaid has strict rules regarding the purchase and timing of annuities, so seek professional guidance.
  5. Exempt Assets: Certain assets are exempt from Medicaid calculations, such as a primary residence (up to a certain equity limit), personal belongings, and one vehicle. Maximize exemptions to protect assets from nursing home costs.

Asset Protection Options for Married Couples

For married couples, there may even be additional legal planning options to protect assets when one spouse is entering a nursing home:

  1. Spousal Impoverishment Rules: Medicaid allows the spouse remaining in the community (the “community spouse”) to retain a portion of the couple’s assets and income. This ensures financial stability for the spouse who does not require nursing home care.
  2. Transfers and Gifts: Carefully consider transferring assets or making gifts within the five-year look-back period to avoid Medicaid penalties. Properly executed transfers can protect assets while still qualifying for benefits.

Consult with an Elder Law Attorney

Navigating Medicaid eligibility and asset protection can be complex, especially with evolving laws and regulations. Consulting with an experienced elder law attorney can provide personalized guidance tailored to your specific circumstances. McIntyre Elder Law can help you develop a comprehensive estate plan that protects assets from nursing home costs while ensuring Medicaid eligibility when needed.

Don’t Wait – Plan for Nursing Home Costs Today

Planning for long-term care costs and Medicaid eligibility should ideally occur before the need arises. By proactively strategizing and implementing asset protection measures, you can safeguard your assets and preserve your financial security in the face of nursing home expenses.

At McIntyre Elder Law, we specialize in crafting personalized strategies focused on asset protection and safeguarding your financial well-being to help you navigate the complexities of elder law with confidence. Your peace of mind is our priority. Contact us at (888) 999-6600 or attend a free event to get started today. 

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Greg McIntyre, JD, MBA

Meet Greg McIntyre

Greg McIntyre, founder of McIntyre Elder Law, is more than just an attorney. As a Navy Veteran, father to six kids, and a loving husband, he values family deeply. This drives his commitment to helping clients safeguard their futures and pass down legacies.

Greg has a passion to help people. Beyond just legal advice, he loves having conversations and strives to build a long-term relationship with every clients that comes through his door.

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