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Medicaid Assets Protection 101

Medicaid planning Bucks Pa

Preparing to enter a nursing home can be as confusing as it is stressful.

Garrett Gummer, a veteran elder law attorney handing Medicaid planning in Bucks, PA, says its one of the most misunderstood issues in his field.

“So many people believe that if they have to go into a nursing home, they’re going to lose everything, the nursing home is going to take everything,” Gummer says. “That’s not the case. The nursing home is not going to take anything from you. All they’re concerned with is that their bill gets paid.”

The bill either gets paid out of the nursing home resident’s pocket, or from another source, which is often in the form of Medicaid.

How does Medicaid work?

Created in 1965, Medicaid is a combined state and federal aid program designed to give medical care – and this includes long term nursing care – to those who can’t afford it.

To qualify for Medicaid, your financial resources can’t be greater than $2,400, a figure that includes cash, stocks and bonds, retirement accounts and real estate that isn’t your primary residence.

If you transfer your financial resources to friends or family within five years of the date you apply for Medicaid, the government counts those as available resources, which could affect your eligibility.

In Pennsylvania, the state Department of Health and Human Services requires anyone applying for Medicaid to divulge all financial transactions made in the previous five years. You might have heard this referred to as the “look back period.”

Certain transactions can trigger a penalty, in which case you won’t be eligible for Medicaid.

Some assets aren’t counted, such as your car, clothing, household possessions and even your home, assuming you plan to move back in after your nursing home stay, or you still have a spouse or dependent children living there.

And some asset transfers won’t trigger the penalty period, including transfers to a spouse, a disabled child or trust for a disabled person.

Medicaid Planning in Bucks, PA

As we said above, you need to fall below a certain income threshold order to qualify for Medicaid. Essentially, you need to be “poor,” Gummer says.

“But with proper planning, there are ways to get you poor, legally, very quickly,” he says. “With proper planning, we can protect their estate.”

Let’s say a woman needed to go into a nursing home and had $300,000 in the bank. She needs to pay for nursing care but would like to apply for Medicaid and protect some of her assets.

It might seem daunting. If the woman transfers her $300,000 to her family member, Medicaid will penalize her for 30 months, thus barring her from eligibility.

But if she transfers half of that money to her children, that penalty phase would only be 15 months. At the same time, she could buy an annuity and use that income to pay for the nursing home. When those 15 months are up, she could qualify for Medicaid, and still leave something behind for her kids.

And in cases where one spouse is entering a nursing home while the other will remain at home, “we can, with proper planning, protect their estate,” Gummer says. “It’s not a situation where you’re going to lose everything.”

When it comes to Medicaid planning, Bucks, PA residents rely on the team at Gummer Elder Law to help protect their assets.

Contact us today, and we’ll get started on a plan to ensure not only your health, but the financial well-being of you and your loved ones.