As you get older, it's important to prepare for a time when you might need nursing home care. If you have assets, you should understand that if you need a nursing home, you will be responsible for paying an average of $6,844 for a semi-private room. Your assets get spent until you have no money left, unless you create an estate plan that protects your assets and allows you to qualify for Medicaid in order to pay for nursing home costs.
The Five Year Look Back Period
If you find yourself suddenly in need of nursing home care, you can't just give away your assets and get approved for Medicaid. There is a five year look back period to receive Medicaid benefits. This means that any assets that were transferred within the last five years appear as if they were given away as an attempt to avoid paying for nursing home costs. While this may not be the case, you have to be careful when you give away assets. If your assets were transferred more than five years before you need nursing home care, then you are more likely to qualify for Medicaid without any problems.
Household Goods and Personal Property
Not everything you own has to be liquidated in order to pay for nursing home costs. This means that you can give away most of your household goods and personal effects and still qualify for Medicaid. In some states, you can even give away a car and not have the asset count towards your Medicaid application. If you own a home and your spouse still lives in it, you don't have to sell your home to pay for your care. The home can be transferred to your spouse, or to a child who has been living with you for a period of at least two years without penalty. If you were living alone and you are no longer going to live in your home, this is an asset that can be considered in your Medicaid application unless an irrevocable trust was set up.
Setting Up an Irrevocable Medicaid Trust
An irrevocable Medicaid trust is a trust that is set up to hold your assets should you need to qualify for Medicaid. All assets that are transferred to the irrevocable Medicaid trust are subject to the five year look back period, as changes to Medicaid have prevented people from hiding assets in a trust in order to qualify for the program. If assets were transferred more than five years prior, the assets will not count towards Medicaid eligibility, so it's important to plan ahead with an estate attorney, like those at Lynn Jackson Shultz & Lebrun PC.
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