Medicaid Planning

Many individuals are faced with the prospect of having to go into an assisted living facility or a nursing home. In order to get Medicaid to pay for the assisted living facility or nursing home, the Medicaid applicant must pass three tests:

  1. The Income Test,
  2. The Asset Test, and
  3. The Look-Back Test.

The Income Test looks at the amount of income the Medicaid applicant receives each month.

Under the Asset Test, the Medicaid applicant can only have $2,000 worth of countable assets. While many assets are counted, certain assets, like the home, are not counted. If a Medicaid applicant does not pass the Asset Test, the Medicaid applicant will be required to spend down his assets until he only has $2,000 of countable assets.

Under the Look-Back Test, Medicaid looks to see if the Medicaid applicant gave away any assets in the last five (5) years for less than fair market value. If an asset was given away in the last five (5) years for less than fair market value, then the Medicaid applicant will incur a penalty period. During the penalty period, the Medicaid applicant must pay out of pocket for the assisted living facility or nursing home.

When the Medicaid applicant has a spouse that will continue living at home, the spouse is allowed to have his/her own income and a certain amount of assets.

Sometimes an individual has sufficient assets to pay for the assisted living facility or nursing home, but the individual wants to save some of his assets for his family. If the individual gives the majority of his assets to his family, the individual will incur the penalty period. However, there are some exceptions to the transfer of an asset for less than fair market value. Additionally, there are techniques to help preserve some of the estate for the family.

Jena Kyle Wynne practices in Medicaid Planning.