Understanding Georgia Medicaid Nursing Home Planning Through Case Studies
The best way to understand Georgia Medicaid nursing home planning is by way of case studies. Let’s look at the following facts:
Case Study: Bob’s Situation
Single person: Bob
Status: Already in the nursing home
Assets: $215,000 (no home)
Income: $2,090/month
Assets Breakdown:
- CD: $100,000
- Bank accounts: $5,000
- IRAs: $110,000
- Car: $12,000
Monthly Income:
- Social Security: $990
- Federal Retirement: $1,100
- CD Interest: $250
Monthly Expenses:
- Nursing home fee: $5,500
- Health insurance premiums: $200
- Miscellaneous: $100
Step-by-Step Medicaid Planning Analysis
Total Assets
The auto is excluded, so we don’t count it for this purpose.
Countable assets: $215,000
Allowed personal exclusion: $2,000
Required “spend down”: $213,000
Net Monthly Expenses
Total monthly expenses: $5,800
Subtracting income (excluding $250 CD interest): $2,090
Monthly out-of-pocket expenses: $3,710
In summary, Bob must use his savings each month to cover the $3,710 shortfall.
Evaluating Planning Options
Since Bob is already in the nursing home, his planning options are somewhat limited:
- He cannot make gifts and wait 5 years for the lookback period to expire.
- He can reduce countable assets through gifts to family using the half-a-loaf technique and purchase a Medicaid-compliant annuity.
How to Calculate the Strategy
Penalty Divisor
The state’s penalty divisor: $6,780 (used $5,000 for simplicity).
Calculating the Proper Size of Gift
- Divide total countable assets ($213,000) by monthly expenses ($3,710) + penalty divisor ($5,000):
$213,000 ÷ ($3,710 + $5,000) = $213,000 ÷ $8,710 = 24.45 months penalty
For simplicity, use 25 months. - Calculate the gift amount:
24.5 months x $5,000 = $122,500 gift
Remaining assets: $90,500 to purchase a Medicaid-compliant annuity.
Applying for Medicaid
Bob must immediately apply for Medicaid:
Countable assets reduced to $2,000
Made a significant disqualifying gift
Medicaid will deny coverage initially, but this starts the penalty period clock.
Annuity Payments and Coverage During Penalty Period
The annuity will pay Bob $3,710/month for 24.5 months.
Annuity payments must be fixed and unchanging.
Adjustments may be required based on annuity company fees and interest rates.
Income Sources During Penalty Period
- Annuity payments: $3,710
- Social Security: $990
- Pension: $1,100
Combined, this will cover the nursing home expenses during the penalty period.
Other Considerations
Possible increases in private pay rates or unexpected expenses.
Bob will have only $2,000 cash during this period.
Entire income goes to the nursing home.
Family may need to cover any shortfalls.
Post-Penalty Period
After 24.5 months:
Annuity payments stop.
Bob reapplies for Medicaid.
With only $2,000 cash, he now qualifies for Medicaid immediately.
Frequently Asked Questions
What are countable and non-countable assets in Georgia Medicaid planning?
Countable assets include cash, CDs, bank accounts, and IRAs. Non-countable assets generally include personal belongings and one vehicle. In Bob’s case, his car is excluded from the Medicaid asset calculation.
What does “spend down” mean in the context of Medicaid eligibility?
“Spend down” refers to reducing assets to meet Medicaid’s eligibility limit. For a single individual like Bob, this means reducing countable assets to $2,000 through allowable expenses or planning techniques before applying for Medicaid.
Can someone in a nursing home still plan for Medicaid eligibility?
Yes, even if already in a nursing home, limited strategies are still available. For example, Bob used a combination of gifting and purchasing a Medicaid-compliant annuity to reduce assets and begin his Medicaid penalty period.
What is the Medicaid penalty divisor, and how does it affect eligibility?
The Medicaid penalty divisor is a state-set dollar amount that determines the length of a penalty period when disqualifying gifts are made. Dividing the gift amount by the divisor gives the number of months Medicaid coverage will be delayed.
What happens after the Medicaid penalty period ends?
After the penalty period, the applicant can reapply for Medicaid. If their countable assets are $2,000 or less and other requirements are met, Medicaid coverage can begin immediately, as seen in Bob’s case after 24.5 months.