Georgia medicaid nursing home application lawyer
The best way to understand Georgia Medicaid nursing home planning is by way of cases studies. Let’s look at the following facts:
Single person, Bob, already in the nursing home, with assets of $215,000, no home, and income of $2090/month.
Assets:
CD: $100,000
Bank accounts: $5000
IRAs $110,000
Car $12,000
Monthly Income:
Social Security: $990
Federal Retirement: $1,100
CD Interest: $250
His monthly expenses:
Nursing home fee: $5,500
Health insurance premiums: $200
Miscellaneous: $100
LET’S GO STEP-BY-STEP
Total Assets: The auto is excluded, so we don’t count it for this purpose. That leaves a total of $215,000 of countable assets. He is allowed a personal exclusion of $2,000, so the amount he must “spend down” is $213,000.
Net monthly expenses: The total of his typical monthly expenses is $5800. From this we subtract his income . WE don’t count his investment income of $250 for this purpose, since the assets that generate this income will be depleted soon, so his countable income is $2090 per month. Thus, his monthly out-of-pocket expenses come to #3710. In summary, he has to dip into his savings each month to cover this shortfall of $3710.
Let’s think about this – Since Bob is already in the nursing home, his planning options are somewhat limited. He cannot make gifts and wait 5 years until the expiration of the lookback period; that would be too expensive. Hoever he can always reduce his countable assets by making fits to family members using the half-a-loaf technique, and then buying a Medicaid annuity with his remaining funds, because that would allow him to qualify for Medicaid much sooner. So let’s take a look at how to calculate that.
Penalty Divisor – After checking the state Medicaid office, we find out that his state’s penalty divisor is $6780 (we will use $5000 to make the calculation easier).
Calculating the proper size of gift. Dividing the total amount of Bob’s countable assets ($213000) by the total of his net monthly expenses (3710) + the penalty divisor 5000 gives us this:
213000 divided by (3710 +5000) = 213000 divided 8710 = 24.45 month’s penalty. We will use 25 months as an easier number to work with.
Then, multiply the above number of months’ penalty 24.5 x the penalty divisor 5000 = 112500. Thus, he should make a gift of 122500 and use the balance of his assets 90500 to purchase a Medicaid friendly annuity.
Bob must immediately apply Medicaid. Although he now only has countable assets of $2000, he has just made a large disqualifying git, so he will be denied Medicaid coverage. However it’s necessary to apply at this point in order to get the penalty period running.
The annuity will pay Bob 3710/mo for the 24.5 month period, but since the actual monthly annuity payments may
vary depending on the annuity company’s fee and the prevailing interest rate, additional calculations may have to be made to et the numbers to work out right. Every payment of the annuity must be fixed and unchanging. so you may have to re-run the half a loaf formula once you get the quote rom the annuity company to fine turn the amount of the gift and mount needed for the annuity.
The annuity, combined with his social security and pension income, will be sufficient to cover his nursing home bill during the penalty period. It’s possible that the nursing home may increase its private pay rate during this 2-year period or that Bob may have other, unanticipated expenses. Since we’re cutting this close so that he does not have more than $2000 at the end of the penalty period, any extra expenses will have to be paid by the family. Bob will have only $2000 of cash during this period, and his entire monthly income goes to the nursing home, so he will not have any other resources to tap into for unanticipated expenses.
Upon the expiration of the 24.5 month penalty period, the annuity payments stop, and Bob can now re-apply for Medicaid. Because the penalty period will have expired by then, and he will only have 2000 of cash, he will immediately qualify for Medicaid.
Georgia medicaid nursing home application lawyer
