Is it too late to plan for Medicaid if my spouse already is in a nursing home?
Many individuals fully intend to take care of their spouse until the end of life, but ultimately must make a very difficult decision to place a spouse in a long-term nursing facility when the caregiving needs become overwhelming or there is a change circumstances. Frequently, the “at-home” or “community” spouse comes to our office believing it is too late to do any planning for Medicaid eligibility, having been advised that all planning had to have taken place five years in advance. With respect to a married couple, this simply is not the case.
To be eligible for Medicaid nursing facility benefits, an individual must meet financial eligibility guidelines, including having only a certain amount of resources/assets remaining in his or her name. It is true the Medicaid laws generally impose a period of disqualification if the Medicaid applicant (or a spouse) has transferred assets out of his or her name within the prior 5 years in a deliberate attempt to reduce resources. However, there are exceptions to these transfer-of-asset disqualification rules and Medicaid penalties, and one such exception relates to spouses.
Assets can be transferred – or “gifted” – in many ways. For instance, the removal of someone’s name from a joint account constitutes an asset transfer to the other joint owner. Similarly, one person’s name can be removed from a deed held in joint tenancy, and that would constitute a gift of one-half the value of the real estate to the remaining owner. If an IRA or 401k is cashed in and the net proceeds are deposited into someone else’s bank account, the net proceeds have been gifted (and unfortunately, income taxes may be accelerated).
The Medicaid rules expressly permit these types of asset transfers and gifts to be made between spouses without any penalty at all. When an application for Medicaid is filed on behalf of someone who is married, the assets of the couple are considered when determining Medicaid eligibility, even if the assets are titled solely in the name of the non-applicant spouse. Moving assets between spouses does not shield those assets from being counted as an available asset when applying for Medicaid nursing facility benefits, but it ensures that after some additional planning is conducted, the transferred assets remain available for future use by the “at-home” spouse. So, it is important to know that when spouses are involved, Medicaid planning can occur even after a nursing home admission because transfers between spouses never triggers a Medicaid disqualification or penalty.
There are other important exceptions to the transfer-of-asset disqualification rules, and you may wish to consult an elder law or special needs planning attorney to evaluate whether any exceptions are available in your circumstances.