Spending Down Assets to Qualify for Medicaid Nursing Home Care

By: Roman Aminov, Esq.

Medicaid nursing home care is a means-based program, which means that the government looks at your income and assets to determine eligibility. Since you can’t gift away your assets and qualify for nursing home care for up to 5 years, elder law attorneys need to find creative legal ways for over-resourced seniors to qualify for the care they need. In this article we will discuss a few common ways that New York seniors can qualify for nursing home care by legally spending their assets down. It is important to note that while married seniors have more planning options than single ones, these strategies work for either. It is also important to remember that it is far better to plan at least five years before you may need nursing care, and that these techniques are only last minute solutions which may not work in every situation. It is highly advisable to speak to an elder care attorney before undertaking any Medicaid planning on your own.

No Gifting
The first rule to remember is NOT to gift any money without speaking to an attorney. Many seniors are tempted to give away their money to qualify for care. Some erroneously think they can gift away $14,000 per year per person without a penalty. These actions may result in a penalty period which will delay coverage. Instead, speak with a Medicaid planning attorney to determine which gifts, if any, can be made without invoking a penalty.

Legitimate Debts and Mortgages
If you have medical bills, credit card debts, taxes, rent, utilities, a home equity loan, or a mortgage on your house, you can pay them off using your assets without incurring a penalty. Keep in mind that you will still need to protect your home from Medicaid liens and Medicaid estate recovery after your mortgage is paid off.

Purchasing Non Countable Assets
Need a new refrigerator? New home furnishings? A new roof? These purchases, along with other items you may need, including new clothes, a newer car, and vacations for yourself, may be purchased without incurring a Medicaid penalty.

Caregiver Agreements
New York Medicaid allows you to spend money on your care without incurring a penalty. This includes paying a child to provide care for you, thereby depleting your funds and helping you qualify. There are, however, a few important requirements. First, the agreement should be in writing and signed by both parties. The agreement must define the scope and cost of the services provided. The cost of the care must be reasonable. Daily time logs must be kept by the caretaker. If a lump-sum prepayment is made to the caretaker, the amount must be calculated using your reasonable life expectancy, and the contract should provide that any unearned funds shall be paid back to Medicaid when you pass away. All payments should be made with check or credit card, since cash payments are hard to prove. The money that you pay to the caretaker will be treated as income to them, subject to their paying income taxes on it. It is best to engage the services of an elder care attorney to prepare and oversee the caretaker agreement.

Prepaying Funerals
Medicaid allows you to use your funds to prepay your funeral, as long as the prepayment is irrevocable. In addition, you are allowed to pay for the funerals of your spouse, children, siblings, parents, and spouses of any of those individuals as long as the marriage is in effect. This can be a very effective way to make “gifts” to your family members while not having them count as a penalized transfer of assets.

To speak with a New York Medicaid Planning Lawyer, contact the Law Offices of Roman Aminov today at 347-766-2685.

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