2018 Medicaid Planning
U.S. Government statistics show that over 70% of persons over age 65 will need some form of long term care in their lifetime and 40% of all persons over age 65 will spend some time in a nursing home. The average stay is 30 months (two and one half years.) In southeast Michigan a 30 month nursing home stay would typically cost over $270,000. Paying for long term care is typically done by paying with your own funds, with long term care insurance or by qualifying for a government entitlement known as Medicaid.
The rules to qualify for Medicaid constantly change and the changes make it more difficult to qualify. The firm regularly practices in this area and has done so for over 20 years. The firm helps families to obtain Medicaid coverage for either home care, the medical portion of assisted living care or nursing home care for their loved ones. Typically, qualifying for Medicaid involves gifting assets to a spouse and or children and converting excess assets to income.
A major change in Michigan Medicaid policy occurred in September of 2014 making it harder for a married person to qualify for Medicaid. Fortunately there are some planning options still available to protect excess assets for a community spouse when the other spouse resides in a nursing home.
These options include converting excess assets into an income stream such as an annuity or loan and or gifting some of the assets to children. Other permissible planning options include paying off debt, making home repairs, and or buying an excluded asset such as a new car.
As of 2018 something known as the rule of halves is still permissible. This allows a gift to children of approximately one half of a parent’s assets. The other half of the assets are retained by the parent, are converted into an income source and are used to pay the nursing home monthly until the Medicaid penalty period is over. Once the penalty period is over Medicaid pays the cost of the nursing home in excess of the patient’s monthly income.
There is no one size fits all planning option for everyone. Each planning option has a pro and a con to be evaluated depending on a particular family’s needs, goals, and asset composition.
If you are facing the unfortunate situation where your spouse or one of your parents are entering a nursing home or are already residing in a nursing home or need home care or assisted living care please call our office for a consultation.