Nursing homes are a big expense that many of our elders face or will face and these costs will continue to rise. One way to soften the expense of nursing homes comes from Medicaid.
Medicaid helps to supplement nursing home costs if the senior citizen meets the eligibility requirements. Eligibility is determined by assessing an individual’s exempt assets and non-exempt assets. Exempt assets include the primary residence, household items and personal property, one car, jewelry, burial plots and some life insurance. Non-exempt assets include balances in checking, savings and money market accounts, IRAs, 401(k)s, stocks and bonds, and other liquid accounts.
Before applying for Medicaid, many seniors try to spend their non-exempt assets and convert the non-exempt assets to exempt assets. This can result in gifting penalties that affect the timing and the amount of Medicaid received by the senior citizen.
There are ways to transfer exempt assets without incurring gifting penalties from Medicaid. A parent can pay his child for caregiving services if the arrangement is documented properly with a caregiver agreement and gifting penalties will not be assessed. There are also allowances married seniors have, such as the community spouse resource allowance and the monthly maintenance allowance that Medicaid permits.
Medicaid can be quite cumbersome and a senior citizen should contact an elder law attorney to assist with the Medicaid application process to ensure that the results are the best that the senior can obtain.