Married Person Owns Home In Nursing Home Medicaid Eligibility Attorney
Facts: Married couple with $200,000 in assets, a home, and $2,500 monthly income: CRISIS PLANNING!
Mark and Tina are married. Tina recently moved into a nursing home, and Mark continues to live in the NH.
Here are the combined assets:
Bank accounts and CDs: $10000 W
IRA $50000 H
Variable Annuity 50000 H
Mutual Funds 90000 JT
Home 250000 JT
2010 AUTO 12000 W
Here is their monthly income:
Social Security 900 W
Social Security 1200 H
Pension 400 H
Here are their monthly expenses:
Nh fee for Tina 5500
Health insurance prem 200
Miscellaneous 100
Upkeep of house 600
Food for Mark 350
Process:
Count the assets: The home and auto are excluded, so we don’t count them for this purpose. Everything else is added up, regardless of whose name it is titled in: husband’s, wife’s or joint. Thus they have $200,000 in countable assets.
Net monthly expenses: The couple’s typical monthly expenses total $6750. From this we subtract their combined income of 2500. They are short 4250 each month. This couple will be completely broke in less than 4 years if they do nothing. Enter Medicaid planning!
Medicaid eligibility:
Assets: Assume they live in a “100% state.” Since the value of the couple’s combined assets exceeds the CSRA of $128640, that is the amount Mark will be allowed to keep; the balance of their assets, other than Tina’s 2000 personal exclusion will have to be spent down or otherwise depleted before Medicaid will pay Tina’s NH bills. Thus, they have 69360 “too much” money to qualify for Medicaid (200,000 – 128,640 – 2,000).
Income: Once Tina is eligible for Medicaid, Mark is entitled to have income of at least $2114 per month. Since his social security and pension total only 1600 per month, he will be allowed to keep 514 of his wife’s income each month; the rest of Tina’s income will have to be paid to the NH (less a small monthly “personal needs allowance” of 30 to 101 and occasional payments for certain medical expenses not covered by Medicaid). The Medicaid program will pick up the difference between her income and the NH cost.
Step 1: Because Tina’s mental state is deteriorating quickly, remove her name from all assets and move to Mark. It does not change CSRA calculation, but allows Mark to make purchases and gifts even after Tina becomes incapacitated.
How to spend down the 69360 “excess assets.”
- Prepay funeral and burial expenses (12k to 20k)
- Prepay burial expenses of other family members 3k to 50k
- Improve the house: estimated cost 15k
- Buy newer car for Mark 10k to 20k
- Buy additional personal property (t.v. computer etc) 6k.
- TOTAL OF ABOVE SPENDDOWN 46k to 111k
- If money is still left over after above expenditures, make a gift using the half-a-loaf technique; see below for calculations.
Half-a-loaf gifting – after making the above expenditures (assume the bottom figure of 46k was all they could reasonably spend), there is still 23360 of excess assets, before Tina will qualify for Medicaid. They should consider half-a-loaf gifting.
Here’s the gift formula: Divide the total amount of excess assets 23360 by the total of the couple’s net monthly expenses 4250 + the penalty divisor 5000, which gives us this:
23360 / (4250 + 5000) = 2.5
Multiply the above number of months’ penalty 2.5 x the penalty divisor (assume in this state it’s 5000) = 12500 . Thus, Mark should make a gift of 12500 to the children and use the balance of their excess assets 10860 to purchase a Medicaid friendly annuity (with Mark as the owner and annuitant) or lend to the children in exchange for a promissory note.
Mark should then immediately apply for Medicaid for Tina, whereupon he will be told that because of the gift, Tina is disqualified for 3.1 months.
The annuity/note payments will increase Mark’s monthly income for that 3.1 month period, allowing him to cover the private cost of Tina’s NH residency, and at the end of the period he will have just below the CSRA 128640.
Married Person Owns Home In Nursing Home Medicaid Eligibility Attorney
