Medicaid Exemptions

Medicaid Exemptions - 3/10/08

INTRO: If your spouse must enter a nursing home, your life savings. . . your entire life savings B may be lost. But by moving money around, you may be able to protect at least part of your assets.

1. HOW CAN WE PROTECT MONEY FROM NURSING HOME COSTS JUST BY MOVING IT AROUND?

A. The easiest and one of the best Medicaid planning techniques is moving money into exemptions. Generally, you can't keep much money or property and get Medicaid benefits. So most people spend their life savings on nursing home costs before getting Medicaid to pay. But there are a few things that are exempt B that you are allowed to keep and still get Medicaid. By moving money into exemptions, your assets can be protected.

2. WHAT ARE THE BEST EXEMPTIONS?

A. For a married couple, the best exemption is the family residence. As long as the spouse is at home, the home is protected, up to a value of $500,000.

So let's say your wife goes into a nursing home, and you have a home with $150,000 and $200,000 in savings. Your home is protected, but you'd have to spend almost half of your savings before you could qualify for Medicaid. That's if you don't do anything.

But if you sold your $150.,000 home and brought a new place for $250,000 cash, your wife would qualify for Medicaid immediately. And our total estimate would remain $350,000. The money's just been moved around.

3. DO WE HAVE TO MOVE TO USE THIS TOOL?

A. No, let's go back to my same example. Instead of buying a new home, let's say you took money from your savings and paid off your mortgage. Or you made home repairs, like fixing the roof or basement. Or you made home improvements, like adding a family room. By Aputting money into the home@ through home repairs and improvements, you can protect those funds from the nursing home.

4. ANY OTHER WAYS TO MOVE MONEY AROUND?

A. Yes. You can put money into other exemptions. For example, you can take money out of the bank, which would have to be split on the nursing home normally, and preparing for a funeral for you and your spouse, if married. You can also buy burial plots. If you're married, your spouse can buy a new car. In some cases, a person may purchase a term life insurance policy or a specialized Medicaid annuity. There are a number of options for moving money to protect it, depending on your personal situation.

CLOSE: You don't have to spend every penny of your life savings on nursing home costs.