Our elder law attorneys recommend Medicaid planning at least five years before you or your spouse needs nursing home care. However, we realize this isn’t always possible. If your loved one needs long-term care now, there are still ways to reduce your income and spend down your assets to qualify for Medicaid.
How Much Do I Need to Give Away to Qualify for Medicaid?
If one spouse needs benefits while the other doesn’t, the Medicaid applicant cannot simply transfer all of their shared property to the healthy spouse. The maximum amount an applicant can transfer to a spouse, the Community Spouse Resource Allowance (CSRA), was $137,400 in 2022 (the precise amount changes annually).
You may need to spend down considerably to meet Medicaid eligibility limits on:
- Assets. Any cash or property in your spouse’s name could be counted as an asset, including real estate, vehicles, collectibles, investments, or retirement accounts. The asset limit for a single Medicaid recipient in 2022 was just $16,800.
- Income. Medicaid will count any source of an applicant’s income, including wages, rental profits, pensions, dividends, and Social Security Income. In 2022, the monthly income for an applicant was limited to $934.
What Can I Do if My Spouse Needs Medicaid Benefits?
Medicaid will know if you give away your assets to friends and family, sell them for cash, or sell them for less than the fair market value. When your spouse applies, Medicaid will review your financial transactions for the previous five years (known as the lookback period). Any unauthorized transfers will incur a penalty that bars your spouse from receiving Medicaid for months—or sometimes years.
There are limited ways you can transfer assets without incurring a Medicaid penalty. For example, you could spend some of your extra resources on:
- Your home. There are a few considerations for the family home if one spouse is planning to stay in the house while the other receives care. First, resources can be used to pay off a mortgage or home equity line of credit or make improvements to the home. The community spouse could buy a larger residence and home-related personal property (such as furnishings) without penalties. Suppose the house is in both spouses’ names. In that case, it’s generally a good idea to transfer it to the sole ownership of the community spouse to avoid Medicaid liens or estate recovery on the property.
- Debts. Funds can be spent on debts, even large debts like loans and credit card bills. They can also be used to prepay the burial plots and funeral expenses for the applicant and the community spouse.
- Medical expenses. Any money spent on expenses related to the applicant’s disability—including assistive devices, personal items, medical bills, or out-of-pocket costs—cannot be counted against you for Medicaid purposes.
- Annuities. Applicants with significant cash resources may be able to purchase a Medicaid Compliant Annuity during the lookback period. These annuities disburse Medicaid-exempt monthly income payments to the applicant or their spouse without penalty.
- Trusts. If one or both spouses are entering a nursing facility, they may want to consider transferring the bulk of their assets into an irrevocable Medicaid asset protection trust (MAPT). They may also create an irrevocable funeral trust to cover funeral and burial costs without penalty.
- Gifts. You may be able to make specific gifts or loans to family members to preserve a portion of the estate for your heirs. However, this must be done carefully to avoid triggering a penalty.
We Can Help You Qualify for Medicaid as Soon as Possible
Medicaid rules are incredibly complicated, and you could unintentionally incur a penalty that prevents your spouse from getting government-sponsored care. If your spouse is about to enter or is already living in a nursing home, the elder law attorneys at Landskind & Ricaforte Law Group, P.C. can determine the best way to obtain benefits. Contact us today through our online form to get started.
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