What Is Medicaid Recovery? How Do I Avoid It?
Medicaid recovery is when a person has been receiving medical assistance from the state Medicaid program for long-term care. This could be in-home care or assisted living care, but primarily for nursing home care. Generally speaking, you can only have $2000 in assets, so there is very little to recover. However, excluded from that $2000 is your home, a car, and various personal effects. When somebody passes away on Medicaid and still owns their home or some excludable assets, those assets then must go through probate to get into the heirs’ hands. Then, the state files a claim against the deceased claimant’s estate, which is termed Medicaid estate recovery, but there are ways to avoid that.
One way to avoid estate recovery is to sell your assets before you pass away. The general rule of thumb is you can save about half the home’s value if you sell it. I usually don’t recommend keeping the house if you have an extended stay in a nursing home. When Medicaid is paying a lot of expenses, it could eat up the entire equity in your home before your death.
The other way to avoid estate recovery is to plan ahead of time to make transfers at least five years before applying for Medicaid or spending down assets through a gift program. These are highly complicated and technical strategies, and we recommend seeking advice from a knowledgeable Medicaid attorney.
Can My Spouse Transfer All Of Their Assets To Me In Order To Be Eligible For Medicaid?
If it’s your spouse, we can effectively transfer all of the ill or sick spouse’s assets and still qualify for Medicaid, but it’s not that simple. There are complex rules and ways to move it so it won’t be counted. Depending on how liquid the assets are will determine whether you can be successful in transferring them. The more fluid your assets are, the more likely you can do the transfer and vice versa. Every situation is different, but when you have a marital status, there are proven ways to protect all family resources while one spouse receives Medicaid.
Can I Transfer My Assets To My Children Before Going To A Nursing Home On Medicaid?
Yes, depending on how far in advance you transfer those assets before application. At present, Medicaid looks back five years to determine if you have made any gifts, so if you make gifts more than 5 years before applying for Medicaid, those gifts will be excluded by Medicaid and all those assets are protected. If however, you make gifts within 5 years of applying for Medicaid, then a penalty period will be assessed by Medicaid. This does not mean that you can’t make gifts within 5 years; it only means you will incur a waiting period before receiving benefits. Generally speaking, for every $6,000 gifted, you have to wait approximately one month to receive your Medicaid benefit. The bottom line is you can usually gift about half of your resources to children, and the other half can be used to pay through the waiting period until Medicaid kicks in. This is a highly complex strategy that usually requires a knowledgeable Medicaid attorney to assist the claimant’s family.
Can Using A Gift And Loan Strategy Preserve My Savings And Expedite My Eligibility For Nursing Home Care?
The rule of thumb is you can gift about half of your resources and use the remaining half to pay for the waiting period to qualify for Medicaid, which expedites eligibility rather than spending all of your money down. Loans can be used to help pay for the gifts while you are waiting on Medicaid, but these are highly complex strategy techniques that should require the assistance of a knowledgeable Medicaid attorney.
For more information on Avoiding Medicaid Estate Recovery In Arkansas, a No-Risk Consultation is your next best step. Get the information and legal answers you are seeking by calling (501) 550-1114 today.
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