Medicaid Rules and Gifts

With nursing homes care running north of $40,000 per year many families who have a "comfortable retirement" could find themselves facing the prospect of spending down a large chunk of their savings and investments should the need for nursing home care arise. Without long term care insurance some will find their only option may be to apply for Medicaid assistance.

While Medicaid rules vary from state to state, typically a person needing long term care benefits must spend down their assets to $2,000. If there is a surviving spouse they can usually keep the family home (but states can consider home equity in excess of $500,000) , a prepaid burial plan, and between $50,000 and $100,000 in resources.

Medicare rules are separate from and independent of tax rules. You may know that you can gift $12,000 per year to anyone you choose through the tax code, but did you know that a gift you made to your children within a five year period are considered assets that could disqualify you or your spouse for medicaid benefits?

If you or a family member are facing the prospect of nursing home care, and you do not have long term care insurance, you should quickly consult with an Elder care attorney, to help guide you through the complex set of rules for your state Medicaid system. But as they say an ounce of prevention is worth a pound of cure, so the prudent approach is to plan ahead time.