State funded Medicaid is available for payment of long term skilled nursing care costs when a person’s available resources are depleted to establish retention limits ($8,000 for most people, and $2,400 when one has a high level of income). However, prior to reaching these resource retention limits, what can you (or your legal agent) spend your resources on when knowing that Medicaid will be needed?
The immediate reaction of many people to the possibility of needing the government to assist with their skilled nursing costs is to give the money they currently have to family members in an attempt to avoid having to use their funds to pay for their nursing care. However, this is one of the worst things you can do because if the gift is within five years of needing governmental assistance to pay for skilled nursing care (Medicaid), any gifts (in the aggregate of $500+/month) will cause a period of Medicaid ineligibility for the Medicaid applicant unless the money can be returned to the Medicaid applicant. In my experience, money usually cannot be returned because it was spent by the recipient. Purchases made, debt reduced, college tuition paid for the applicant’s grandchild, are common examples of where funds have gone.
Having resources in excess of the permissible level to be eligible for Medicaid is known as being “over resourced”. So what is a person to do with their resources if the need for skilled nursing is anticipated as being needed within five years and they have more resources than the permissible level? During the five year period prior to making a Medicaid application, a person can use their resources in several ways and still maintain eligibility for Medicaid once there is the medical need and their available resources reach the permissible Medicaid level. Likewise, if skilled nursing care is needed immediately, a person can utilize their resources to benefit him or herself (and spouse, if applicable). Below is a list of acceptable ways you can utilize your resources and not adversely affect Medicaid eligibility:
- Purchase of needed personal items or medical equipment for self or spouse
- Payment of care costs and existing bills of self or spouse
- Purchases of burial plots for self or family
- Repairs to their residence
- Pre-payment of their real estate taxes, fuel costs, funeral services for self or spouse and legal fees needed to obtain the Medicaid benefits
- Purchase of a Medicaid compliant annuity
- Funding of a trust for their special needs child
- Giving gifts in the monthly aggregate of $500 or less
If you or a loved one needs long term care Medicaid now or may in the future, the elder law attorneys of HRMM&L would be happy to meet with you, review the particulars of your resources and develop a plan that would allow you to act with confidence and peace of mind when utilizing your resources prior to the filing of a Medicaid application, knowing that your actions will not cause a problem for your Medicaid eligibility.