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Medicaid Law and Protecting Your Parent's Assets: Page #2 

An example of protecting assets in light of the Medicaid law may be the following example.  Say that your parent decides that they need a nursing home immediately and give you their $150,000 in savings.  If the average cost of nursing home care in your area is $5,000 a month, then the Medicaid law would stipulate that your parent would not be eligible to receive Medicaid for 30 months (5,000 x 30), which is the entire time that it would take your parent to spend the $150,000 in savings.

One way that some people get around this provision in Medicaid law is to give away half of their money, keeping just enough to pay for their care throughout those months that they will not be covered.  So rather than giving away the whole amount (or putting it in an irrevocable trust for their heirs) they give away half of their savings or $75,000.  Your parent now has to pay for their own nursing home care for 15 months, and keep the other half. 

While the Medicaid law of most states concludes that a person can keep a home and some personal belongings, the state may claim anything remaining in the estate after the person dies to recoup what has been spent on their care in the meantime. Depending upon the states’ Medicaid law, your parent may be able to protect their home by putting the deed in someone else's name. Even if your parent lives in the house during his/her lifetime, it is still out of the reach of state officials and other creditors.  But as mentioned previously, state officials will look back for 36 months, making it imperative for individuals to plan in advance. 

It's not always just a matter of abiding by Medicaid law that is important.  Also, your parent needs to consider what kind of nursing home they want to be in.  There is a variety of nursing home facilities, some good, some not so good, and everything in between.  Therefore, if your parent chooses to give away their assets to go on Medicaid, they should not be overly zealous about it as they will need money to live on.  And, your parent would be well advised to keep enough money so that they can apply to a good nursing home as a self paying resident for at least a period of time.  This will give them a much better selection of nursing homes rather than just taking what they can get. 

Also, be well aware that the Medicaid law is constantly changing.  Opportunities to protect assets are becoming narrower and may eventually disappear.  What is permitted under Medicaid law today may not be permitted tomorrow.

Some information from How to Care for Aging Parents by Virginia Morris

Additional Information and webpage by Paul Susic MA Licensed Psychologist Ph.D. Candidate                                      

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