Overview
Our most typical case involving a single person will be that of also owning a home with some income.
Example Case Facts:
M is single and has the following assets:
- Bank accounts/CDs: $42,000
- Home: $250,000
- Car: $12,000
M’s Monthly Income:
- Social Security: $900
M’s Monthly Expenses:
- Nursing home fee: $5,500
- Health insurance premium: $200
- Miscellaneous (grooming, etc.): $100
Analysis
If M is already in the nursing home:
Total Assets:
The home and auto are excluded, so they aren’t counted for this purpose. Countable assets total $42,000. She’s allowed to keep up to $2,000 as her personal exclusion. Her “spenddown” amount is actually $40,000.
Net Monthly Expenses:
Total monthly expenses: $5,800
Less income: $900
Out-of-pocket monthly expenses: $5,800 – $900 = $4,900
Clearly, she can’t afford the nursing home without outside help.
Medicaid Eligibility:
Without planning, M’s remaining savings will be completely gone in a little over 8 months. At that point, she should immediately qualify for Medicaid coverage of her nursing home bills.
M’s SSI will continue to be paid to the nursing home even after she is on Medicaid. The Medicaid program will simply pick up the difference between her income and nursing home cost.
Strategic Considerations
Let’s Think:
Although M does not have a lot of savings, there is no reason to just spend it until it’s gone. With relatively small amounts of countable cash, setting up a half-a-loaf strategy may not be cost-effective because of the complexity and legal fees involved.
Instead, she should try to spend down her extra $40,000 by:
- Improving her house
- Upgrading her auto
- Pre-paying her own funeral and burial expenses
- Pre-paying burial spaces for other family members
Alternatives:
If there is still any money left after the above, she can certainly utilize the half-a-loaf method to gift half of that balance and use a promissory note or Medicaid annuity for the other half.
Alternatively, if M is in a facility that does not accept Medicaid and wants to move to a facility that does, she can retain some of her savings to pay privately for a few months and then apply for Medicaid coverage. Sometimes that will help her move up closer to the top of the waiting list for the new nursing home and secure placement sooner.
Conclusion
Single Person Owns Home In Nursing Home Medicaid Eligibility Attorney
This guide outlines common scenarios and solutions for individuals in similar circumstances seeking Medicaid eligibility. Proper planning can protect remaining assets while securing necessary long-term care.
Frequently Asked Questions
What assets are excluded when calculating Medicaid eligibility?
When evaluating Medicaid eligibility, a person’s home and vehicle are typically excluded from countable assets. In the example provided, only the $42,000 in bank accounts and CDs are considered countable, not the $250,000 home or the $12,000 car.
How much can a single person keep while qualifying for Medicaid?
A single individual can retain up to $2,000 in countable assets. The rest must be “spent down” in a manner that complies with Medicaid rules before eligibility is granted. In this scenario, M needs to reduce her assets from $42,000 to $2,000.
What is a Medicaid “spenddown” strategy?
A spenddown strategy involves reducing countable assets to meet Medicaid’s financial requirements. Acceptable methods include home repairs, vehicle upgrades, prepaid burial arrangements, and sometimes specialized strategies like the half-a-loaf method.
Will Social Security benefits continue once Medicaid coverage begins?
Yes, Social Security benefits will still be paid. However, they must be contributed toward the cost of the nursing home. Medicaid then covers the difference between this income and the nursing home’s monthly fee.
Can someone choose a nursing home that doesn’t accept Medicaid?
Yes, but this could delay Medicaid coverage. If transitioning to a Medicaid-accepting facility, the individual may use personal funds to pay privately for a short period, which may improve their chances of placement by moving them up the waiting list.