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Medicaid (Asset Protection) Planning

Medicaid Planning for Nursing Home CareAmong the concerns of a family facing the prospect of admitting a loved one to a nursing home is how they will afford the costs, which in Pennsylvania, average around $9,000-$10,000 per month.

Most health insurance plans and Medicare provide very limited coverage for patients in nursing homes. Unless you have long-term care insurance to cover your care, the only option is to pay for the care yourself until your assets are exhausted and then apply for Medicaid. Medicaid is a joint federal/state program begun in the 1960s to provide medical care, including nursing care, to those who cannot afford it.

Generally, to qualify for Medicaid eligibility, your financial resources can be no more than $2,400. This includes cash, stocks and bonds, bank accounts, your IRA, and real estate not your principal residence. Also, if you transfer any financial resources to family or friends within five years of the date you apply for Medicaid, these will be counted as available resources, and may affect your eligibility.

There are a number of resources that are not counted in determining your eligibility for Medicaid. These include your automobile, household goods, clothing, jewelry, a gravemarker, a pre-paid funeral, and your home if you state an intention to return to it after your nursing home stay, or it is used as the principal residence of your spouse or dependent child.

After qualifying by showing your resources have been spent down to $2,400, you will have to prove that your income is insufficient to pay for your nursing home care. Generally, all of your income, but not your spouse's income, is counted. This includes pensions, Social Security, and interest and dividends from bank accounts and other investments. You are, however, permitted to keep $45 per month as a personal needs allowance.

If you are married and living at home with your spouse, different rules may apply in determining your eligibility. Generally, your spouse is permitted to keep his or her income and any qualified retirement funds. Also, your spouse is permitted to keep a portion of the resources owned by either of you, in addition to the resources mentioned above that are not counted in determining your eligibility for Medicaid. This amount is approximately one-half of the couple's non-exempt resources, with the low limit of $23,884 and a high limit of $119,220 in 2015. These amounts change from year to year. To learn more about navigating the complexities of Medicaid planning and asset protection, contact an attorney.