What are the Countable Assets & Non-Countable Assets in Medicaid Spend-Down?

I’m certain, that if you are over the age of 65, you have participated in a few seminars, talked to a few people, professionals and otherwise, and informed yourself of the new confiscatory rules of Medicaid, the 60 month look-back, and have become wide awake to the fact that if you don’t spend the time now, to sharpen your axe, you will become the primary payer of your nursing-home costs, right down to your last $2,000.

The government provides very little information and does NOT promote website knowledge to help you make smart decisions. I know this because, we bought the telephone number 1-877-21-MEDICAID (1-877-216-3342) and we were absolutely overwhelmed with phone calls. In fact, up until a couple of years ago, it was illegal for any advisor to offer fee-based information about how to plan for Medicaid.

Countable Resources to Pay for Your Own Medicaid:

The short definition: everything “you own” or “you own jointly with your spouse” that you can spend or convert to cash, is “countable” towards your responsibility to pay for your nursing home care, till you die, then the state enabling acts will collect, what’s left.

Cash, checking, savings, CDs, government bonds, mutual funds, retirement accounts, IRAs, 401Ks, 403b, TIAA-CREF and other retirement accounts, cash value life insurance, annuities, tax deferred annuities, any car beyond the 1st car, trucks, boats, farm livestock, equipment, and machinery, land, commercial real estate, “everything.”

What are “Not Countable” Assets in Medicaid Rules:

Your personal possessions, such a clothing, furniture, jewelry, one motor vehicle without regard to value, second auto – to the extent its medically required for transportation of the Medicaid participant or family member providing for such purpose (each state may have different rules), prepaid funeral plans, small amounts of life insurance, assets that are not easily accessible such as a lawsuit in progress or other property that cannot be liquidated. For married spouses, the residence is protected up to $500,000 of equity (some states $750,000), if you are single the residence is up for grabs with some exceptions such as the Medicaid patient/resident can prove that there’s a reasonable likelihood of being able to return to the home, and other similar nuances i.e. disable child living in the home, or another relative living in the home. It gets even more complicated, but the purpose of this dissertation is not for you to become the expert in Medicaid exclusions. The purpose is to “open your eyes” to what your elected officials are doing to suppress your life-time’s work.

How to “Plan Out” of These Restrictive Quagmire of Medicaid Laws

Previously stated, it’s illegal to advise around Medicaid laws; it’s on the books, just not enforced.

The best way and the only significant effort that pays big dividends is NOT TO FALL IN THIS TRAP. If you own nothing, then you don’t fall in this trap. This quicksand of perplexing laws is designed to confiscate. If you own nothing, then government gives you more than you deserve. Or you deserve to own nothing and therefore should be at the mercy of government. Government rewards risky behavior. If you saved nothing, spent everything, and in fact you owe more money than you could possibly earn, you shall be rewarded with every possible government give-away, and bankruptcy.

How to Legally Own Nothing with Regards to the Medicaid Spend-Down

Assets owned by a “THIRD PARTY FIDUCIARY” are not available for the satisfaction of YOUR LIABILITY, no matter who’s the creditor – including any government or quasi-government agency, state or federal. Assets owned by someone not related to you by blood or marriage, are not owned by you – period.

The “someone” can be a legal entity established under law. An IRREVOCABLE TRUST with an INDEPENDENT TRUSTEE, not related to you by blood or marriage is a third party fiduciary.

Assets owned by a THIRD PARTY belong to the THIRD PARTY and are not available to “your creditor” in satisfaction of debts created by you.

The Trustee as Independent Person (i.e. Third-Party Fiduciary)

The TRUSTEE must be an INDEPENDENT PERSON, not related to you by blood or marriage. There must a true and perceptive legal independence between you and the legal fiduciary obligation created by the Trust agreement. You must be willing to “divorce” yourself from your money.

Avoiding Fraudulent Conveyance of Medicaid Asset Protection

Assets transferred to your Irrevocable (Third Party) Trust must be in EXCHANGE of equal value in order to avoid FRAUDULENT CONVEYANCE claims by past, present, or future not-yet-born creditors. You would not give your assets to a third party without adequate and full consideration; that would be fraudulent. In other words, fraudulent conveyance is avoided when you give me $100,000 and in exchange, I give you $100,000 of goods or services. If I gave you less, then it would be fraudulent to the extent you received less than equal consideration.

Learn more about how to hide your assets from Medicare:

• Hide My Assets from Medicare
• How the Rich Hide Their Assets
• Hide My Assets Medicare
• Asset Protection Trusts
• I'm Getting Sued-Hiding Assets
• Revocable Trusts vs. Irrevocable Trusts

Read more articles on irrevocable trust asset protection:

• Irrevocable Trust Benefits
• Ultra Trust® Irrevocable Trust
• What is the Irrevocable Trust?
• Irrevocable Trust Divorce
• Irrevocable Trust Agreement

Become eligible for Medicaid from prudent Medicaid planning and asset protection strategies

Eligibility for Medicaid

Planning and properly setting up your estate for Medicaid eligibility can reduce your fear of ending up in a nursing home because meeting Medicaid requirements can save on average a eighty-five thousand to one hundred and fifty thousand dollars. Typically, the annual cost for nursing home care ranges between $85,000 and $150,000. This placement and change in life means many things. It causes the loss of personal autonomy and can come with a hefty financial obligation.

Many people pay for these costs from their personal savings. This results in the depletion of all savings and assets. Who is eligible for Medicaid? Only after your assets have been depleted does one get eligibility for Medicaid benefits. There is an advantage to paying for the nursing home with your own money. It allows you to choose where to live and it can eliminate having to deal with state bureaucracy. The disadvantage is the huge expense. This is why careful planning is so important.

Medicaid asset protection for your estate is possible. A long-term care insurance policy could possibly help achieve this, but it not the best way to protect your assets. Whether you are receiving Medicaid or Medicare benefits, it is important to take proper planning steps to make sure you are receiving all of the benefits you are entitled to as early as possible.

Medicare Part A

Medicare Part A is something that every aging person should be familiar with. This part of Medicare will cover up to 100 days in a skilled nursing facility per illness. The catch is the actual definition of a skilled nursing facility. In fact, due to the strict guidelines and varying definitions, very few people are actually entitled to these 100 days. The end result is that Medicare ends up only paying for 9% of all nursing home care in the country.

Medicaid – What is it?

Medicaid is the only way to obtain long-term medical care in the United States. Most people are required to pay nursing home costs out of their own savings until they have reached the financial eligibility for Medicaid. Medicare and Medicaid are often confused. It is important to understand that these are two completely different programs with different benefits. Medicare is the health insurance granted to those who receive Social Security. It is an entitlement program that could be compared to PPO’s and HMO’s like Blue Cross Blue Shield and United Healthcare. Medicaid is a form of welfare and is largely based on income. To be eligible for Medicaid, you must not earn more than the specified amount in a one month period – in most states the absolute maximum income level is $2,300 per month.

Medicaid is administrated by individual state governments, but is reimbursed by the federal government and thus most states rules are very similar but different. Each state has its own form of Medicaid, often called by different names. The state operates the program, but all programs must conform to specific federal guidelines. This means that Medicaid rules and regulations differ in each state, which can cause a lot of confusion. The best thing to do is contact your state to find out exactly what the eligibility rules are and what benefits are offered through the program. These programs change often so it is important to always have the most up to date information available.

Using Medicaid Asset Protection for Eligibility

One way people plan for Medicaid is by distributing their assets before they require the benefits from Medicaid. When this is done, individuals will be able to qualify for Medicaid faster than if they had to spend down their savings and deplete assets. This is why planning for Medicaid can be difficult. It is nearly impossible to know when you will need long-term care. However, planning for this care is one of the most important things to do. An asset protection plan is one way to go about planning. These plans will reallocate your assets and transfer money, making you eligible for Medicaid when the time comes.

Read other articles on how Medicaid eligibility, Medicaid asset protection and protecting your assets from nursing home:

• Medicaid Eligibility Online
• Medicaid Eligibilty Planning
• Medicaid Asset Protection
• Protect assets from nursing home
• Protect assets: Medicaid Income Eligibility

There are some important questions to consider when there is a chance that you will be in a nursing home in the years to come. You want to make sure your assets are protected completely.

7: Medicaid income eligibility requirements: Can I transfer income and assets to my children before going into a nursing home and still qualify for Medicaid?

This is likely not possible. When applying for Medicaid you must understand that under the 60-month look-back Rule, Medicaid coverage can be denied if assets have been transferred within 60 months prior to applying for the benefits. As described previously, if you were to gift or divest your assets to your children within 5 years of entering a nursing home and you apply for Medicaid online or off, you will be denied coverage until the money is returned. The real problem comes in when the children spend the money and do not have it to give back in a situation like this one.

8: Medicaid application: Is it too late to give away my assets and qualify for Medicaid if I am already in a nursing home?

It’s never too late to reallocate your assets. It is possible to give away all assets and then in 5 years become eligible for Medicaid.

9: Should I make use of a trust to protect my assets?

It is much more beneficial to use an irrevocable trust instead of transferring assets to family members. Seek for the UltraTrust™ for superior irrevocable trust asset protection.

10: How to apply for Medicaid: Are there other ways to protect my assets?

There are many ways to protect assets. Medicaid will not penalize anyone if they choose to spend their assets; however, one must be careful to avoid fraudulent conveyance. Fraudulent conveyance is the act of divesting your assets for less than a fair market value consideration or payment. An expert can walk you through a proper estate plan that will avoid these potential problems or contact Estate Street Partners.

11: How can I protect my home?

Medicaid allows for the applicant to retain a principal residence. Your home is considered exempt property. However, unless there is a surviving spouse, Medicaid will be reimbursed if the home is sold after your death by a lien being put on the home. This is where it is advised to sell or transfer to an irrevocable trust such as the UltraTrust™

12: Is it wrong to hide assets to qualify for Medicaid?

When applying for Medicaid, full financial disclosure is required. It is best to consult with an elder law expert before making any decisions or contact Estate Street Partners.

13: Is this information reliable?

These are just a few questions that are commonly asked. When applying for Medicaid, it is always best to do the research. Find out what the current requirements are for eligibility in your state and consult with an experience attorney or contact Estate Street Partners to discuss your assets. States typically offer online information and forms that you may download and print, however no states allow you to currently apply for Medicaid online.

14: Should I hire an expert?

Simply stated: absolutely. This is the best way to make sure laws are being followed and your assets are protected.

15: How do I find an expert?

Any expert that practices elder law can help or contact Estate Street Partners. Make sure the expert is experienced and has a good rapport. You want to make sure you trust the right person with your assets.

Read part one of this two-part series on protecting your assets from nursing home and Medicaid asset protection: Protect Assets from Nursing Home

How to Protect Your Assets from a Nursing Home FAQ

There are some important questions to consider when there is a chance that you will be in a nursing home in the years to come. You want to make sure your assets are protected completely.

1: How much do nursing homes cost?

Based on recent studies, the average stay in a nursing home is around two years. The nursing home costs about $80,000-144,000 per year depending on the state with which you reside. The states with higher costs of living tend to have more expensive nursing home care, but even within each state there is a range depending on the quality of facility.

2: Will Medicare pay for the cost of the nursing home?

Medicare does not pay any nursing home expenses. Medicare in home nursing care coverage is available, but the only time Medicare will remit a payment is if the individual is placed in a skilled nursing facility.

3: Medicaid application: What government program will pay for the nursing home?

When applying for Medicaid you must understand that if you have sufficient assets to pay for nursing home care yourself, no government agency or program will pay for your nursing home care expenses. Medicaid is a government program that will pay for most of the expenses if you have already spent your money and have run out. If you are a veteran, you may get additional benefits that will help with the expenses.

4: How to apply for Medicaid: How can I avoid being impoverished due to the high nursing home costs?

This will largely depend on your marital status as well as your planning prior to entering a nursing home. Another determining factor is whether you are already in a nursing home or anticipate a long stay. Unless you are facing a lengthy stay, it is recommended you do not give away your assets. Giving away or gifting your assets will likely cause you to be denied Medicaid coverage. If you were to gift or divest your assets to your children within 5 years of entering a nursing home and you apply for Medicaid online or off, you will be denied coverage until the money is returned. The real problem comes in when the children spend the money and do not have it to give back in a situation like this one.

One way to reduce the cost of nursing home care is to live in a state where nursing home care is less expensive. For instance, in Texas, Medicaid nursing home care costs are less than in New York. Yet another example would be in Florida, Medicaid nursing home care costs are less than in California.

5: If my spouse is going into a nursing home, can their assets be transferred to me and then qualify for Medicaid?

This will probably not happen. All non-exempt assets owned by the couple are added together to determine your eligibility for Medicaid. The spouse that is going into the nursing home is disqualified from receiving Medicaid until the individual spouses’ assets total $2,000 or less. The other spouse can retain their non-excludible assets to a maximum of around $100,000 (it changes annually). States have different laws pertaining to Medicaid eligibility. It is best to check with your state to learn what the qualifying factors are.

Some assets are exempt and others are not. You have one opportunity at submitting an application form to Medicaid. Do not submit it until it has been reviewed by an expert – it could cost you tens of thousands of dollars.

States typically offer online forms that you may download and print, however no states allow you to currently apply for Medicaid online.

6: Medicaid income eligibility requirements: How much income can I make and still qualify for Medicaid?

The requirement is that you are over the age of 64 years and earn less than $1,700 a month. It is possible to qualify if you earn more than this amount, depending on the cost of the nursing home. The spouse of the individual receiving Medicaid benefits is allowed up to $2,300 of income per month. These figures change annually, so be sure to stay up to date on what the actual qualification requirements are.

Read part two of this two-part series on protecting your assets from nursing home and Medicaid asset protection: Protect Assets: Medicaid Income Eligibility