General Medicaid Rules

If you or your spouse should become sick or disabled and must spend time in a nursing home, you may very well be facing financial devastation. Did you know that the typical cost for a nursing home in Ohio today is between $60,000 and $100,000 per year? Could you afford to pay for care this expensive? For most people, the answer is "No." Medicaid is a health care program for the poor for medicines and long term nursing home stays. Not surprisingly, Medicaid eligibility requirements are tough to meet and the hundreds of pages of regulations very hard to read or understand.

Let's look at some of the basic rules. As a single person, you cannot have more than $1,500 of "countable" resources. Bank accounts, stocks, bonds, IRAs, and even cash values of life insurance policies are countable. A married couple is allowed to keep a little more of their countable assets, but the rules are more complicated. When only one spouse needs nursing home care, they may retain half of their total countable assets, with a maximum or cap of slightly over $100,000 (this number is indexed each year). Some assets are exempt (not countable). These include: your home (while someone is living there), your household goods, personal effects, and a car.

For example, let's take a fairly typical situation: you and your spouse own your home plus $100,000 in savings. Here are three common strategies you may follow. The healthy spouse may keep the house and $50,000. To "spend down" the excess funds, first, pay off debt. Medicaid looks only at assets, but does not consider amounts owed to others. You can drain savings or liquidate stocks and pay down your home mortgage to reduce your countable assets.

Second, invest money in exempt assets. For example, you may make home repairs or improvements. The home is exempt regardless of its value or the amount added to it. If you need a car or television, you can purchase those to reduce countable assets. Purchase a cemetery plot and irrevocable funeral contract, both of which are irrevocable.

Third, you may give assets away to children or other trusted family members, to hold for you until you need the funds. If you need money later, your child can always return it to you (of course, the risk is that he won't). Gifts or transfers of assets do trigger a waiting period of up to five years. However, with proper planning, gifting can be a wonderful planning tool.

Be warned, however. There are 100's of pages of regulations that are designed to confuse you and prevent you from qualifying for benefits. Plus, the regulations could allow Medicaid to terminate your benefits for any mistake you may make, even honest ones. The qualification rules are becoming more and more difficult. Even though Medicaid is a welfare program, you need an advocate on your side during the planning and application process to fight through the hundreds of rules on your behalf. Please be sure to see a qualified Elder Law Attorney for assistance.