How to Protect Assets From Nursing Home Costs -

How to Protect Assets From Nursing Home Costs

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If someone who is elderly or disabled can no longer take care of themselves, a nursing home that cares for them mentally and physically can provide a safe environment. However, these services come with a steep price, and it is essential to think about how you’re going to protect assets from nursing home costs.

According to Senior Living, the current cost of nursing home care is anywhere from $82,128 to $92,376 per year. That is a lot of money for families. Many of seniors may assume that Medicaid will pay for any long or short-term nursing home care they may need. In fact, Medicaid will pay for your nursing home care only after you have exhausted all of your personal assets.

It is always criminal to try and hide your assets from the government. However, there are steps you can take to protect assets from nursing home costs legally. Here are some of the most popular.

What are the steps you can take to protect your assets from nursing home costs?

  • Give gifts of money to your loved ones. Do this early. Although you never know when you may have to go into a nursing home, the government may try to seize any assets you give away within the five years before entry.
  • Have your lawyer draft a “life estate.” This document also protects your property after your death.
  • Put assets into an annuity. There may be a time-frame that prevents you from using any Medicaid services after you transfer your assets.
  • Transfer some of your monthly income over to your spouse. The Federal Spousal Impoverishment Act prevents spouses from being forced to use their own income for nursing home care.
  • Create an irrevocable trust. These are different from living trusts and are also exempt from Medicaid.
  • Create a “pour-over” trust. This procedure will require you to modify your wills with the help of a qualified attorney.

What is Medicaid exempt?

Remember, if one spouse applies for Medicaid to cover the cost of nursing home care, both spouses assets are considered. Medicaid exempt means there are certain assets that you can keep if one spouse goes into a nursing home. The “institutionalized” spouse is the one in the nursing home, and the one at home is called the “community” spouse. The community spouse is allowed to keep certain “resources” that are Medicaid exempt.

Medicaid exempt assets for married people

  • $74,829 to $123,600
  • One vehicle
  • One house with a value of up to $858,000
  • Furniture, personal belongings, and jewelry
  • Assets held more than five years in a MAPT (Medicaid asset protection trust)
  • Annuities that name the community spouse as the beneficiary
  • Assets that are in a trust set up by someone other than the applicant
  • Minimum Monthly Maintenance Needs Allowance (MMMNA)

Medicaid exempt assets for single people

  • $15,150 in resources
  • Assets held more than five years in a MAPT (Medicaid asset protection trust)
  • Assets that are in a trust set up by someone other than the applicant

How can you make an asset Medicaid exempt?

Making an asset Medicaid exempt means moving them from being “countable” to them being “non-countable.” Here are a few perfectly legal ways to accomplish this.

  1. Home Improvements – Since your home is already Medicaid exempt, it is an excellent plan to use your savings for home improvements. This method increases the value of your house while decreasing cash that is countable.
  2. Funeral Costs – Spend your money on your funeral and burial costs now. These assets are non-countable, and it is a better practice than to leave these expenses to a loved one.
  3. A New Car – One vehicle is Medicaid exempt, so purchasing a newer, more valuable car is a way to use your savings. There is no limit to the value of the vehicle, so spend as much as you like. Even if you don’t drive the car, it is still non-countable. Be careful because an over-the-top purchase like an exotic sports car could be considered an investment.
  4. Upgrade Your Belongings- Since a large amount of personal property is exempt, you can also use your savings here. Upgrade your wardrobe and electronics to make them non-countable.
  5. Purchase Annuities – Annuities are a type of insurance. You buy a certain amount, then that amount is paid back to you at regular intervals. These are considered non-countable and are a great place to put your countable assets. Be sure to work with someone who experienced in retirement strategies and state annuities rules.
  6. Purchase Life Insurance – No-cash-value life insurance policies may also be Medicaid exempt, depending on your state.

For advice on how to protect assets from nursing home costs, and for in-depth details on Medicaid planning, check out this page. The time is now to start planning for your future.