The general Medicaid eligibility rule is that a person can’t have more than $2,000 in countable assets. If you are trying to become eligible for Medicaid to pay long-term care costs, you may need to spend down your assets or use other strategies to qualify.
Fortunately, some assets may not be counted for Medicaid purposes. The spouse of a nursing home resident is permitted a higher allowance of assets, and other assets are exempt.
Some personal possessions, one vehicle, and the primary residence may be exempt from the Medicaid asset calculation. However, there are some complex rules that apply, so ask your elder law attorney exactly how these will apply to your case.
If you have countable assets that exceed the $2,000 threshold, you may think that you could just gift them to your kids, but Medicaid has rules about transfers that include severe penalties.
Five-Year Penalty Period
Starting the day you apply to Medicaid, there is a five-year look-back period on any asset transfers you make. If you give away assets and don’t receive fair value, you will be penalized.
The penalty is calculated based on the value of the transferred assets and leads to a ban for a certain period of time. If you transfer valuable assets, you could be ineligible for Medicaid for several months or even years.
Because of the transfer penalties, it’s generally easier to qualify for Medicaid and minimize spend down by planning as far in advance as possible.
Income and Estate Recovery
Your income is also considered in Medicaid eligibility. However, there are some planning techniques you can use if your income exceeds the Medicaid threshold.
Estate recovery is also an important consideration for Medicaid applicants. The state has the right to seek reimbursement of certain costs from your estate. This could reduce the potential inheritance for your heirs, so make sure you understand these rules before you apply for Medicaid.
Medicaid has strict and complex rules, but the benefits may be worth it if you need long-term care. Consult a Medicaid planning attorney to learn more.
Call (864)345-8529 to request your consultation at our North and South Carolina offices with one of the King Law elder law attorneys.