Changes in Medicaid Planning Options for Couples

Medicaid is the government program that will help pay for care in a nursing home. The complicated rules and policies surrounding this program usually cause people to seek the advice of an elder law attorney. Historically, with the help of an attorney, a spouse could receive Medicaid benefits without having to spend down any assets. The technique involved the use of a special trust. But, this 18 year old planning option for couples was shot down in mid-August by the gatekeepers that determine Medicaid eligibility. Although a formal policy change was not made, it was reported that the existing rules are now being applied in a different way.

Prior to mid-August 2014, the “solely for the benefit” trust was accepted as a viable planning technique. Preparing and transferring assets to a solely for the benefit of trust allowed the spouse of a person that required nursing home care to protect assets in excess of eligibility limits. The Medicaid asset eligibility rules require that a couple only have a certain dollar value in countable assets. This limit is dependent on each couples amount of assets and when the need for care first arose. Couples with higher net worth might be able to keep at the most $117,240 in countable assets. However, those of more modest means will have to spend one-half of their countable assets until they would be eligible for help. Generally speaking, countable assets include everything but a house, one vehicle, an irrevocable funeral contract, life insurance without a cash surrender value, and life insurance policies with very small face values. All other assets are countable towards the Medicaid asset eligibility rules.

Couples who had assets exceeding the value limits were able to ensure that the spouse staying at home would have enough resources to comfortably maintain their lifestyle. However, this planning technique is now being interpreted differently than it has been for the past 18 years. The use of a solely for the benefit trust is no longer a viable planning technique. Couples all over the State of Michigan who had applications pending when this new interpretation began were affected. Their applications for benefits were denied. They must spend down their assets until they meet the eligibility requirements for their specific situation, or consider other planning techniques that will help them pay for the high cost of nursing home care.

Couples or anyone concerned about the cost of nursing home care should seek legal advice well in advance of needing care. Elder law attorneys are staying abreast of this very important issue. An elder law attorney can explain the eligibility rules and the planning techniques that may be available.

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