Are you confused and worried about nursing home spending? You are not alone!
When it comes to the topic of long term care costs, there is a lot of inaccurate information floating around that can lead to misunderstanding and sometimes even panic.
With the cost of long term care continuing to increase and currently averaging over $10,000.00 a month in Pennsylvania, it is no wonder that this topic causes such anxiety. Many elderly Pennsylvanians rely on long term care assistance to meet this increasingly expensive obligation. The primary assistance resource for most is Medicaid.
Medicaid is a Federally funded, State managed, “needs-based” program that has strict qualification rules, including income and asset limits. Because the income and asset limitations are very low (no more than $2,000.00 in assets for an individual in 2022), qualifying for this assistance can mean having to first “spend down” all of your assets.
We hear a lot of incorrect theories from folks about Medicaid, Medicaid qualification, and the rules related to asset transfers and titling. We hope that by dispelling a few of the more common myths, we will alleviate some of the confusion and worry that pervades the subject.
Myth – If I need nursing home care now, but I did not transfer assets five years ago, I have no options, will lose my home, and spend every penny of my savings on care.
We frequently hear folks express the completely inaccurate assumption that there is nothing that can be done to protect assets from nursing home spending if proactive asset protection planning has not been done. The good news is, this is not true! There may be crisis planning options available.
While advance planning is certainly always the preference, and serves to protect tens or hundreds of thousands more than crisis planning, all hope is not lost. There may be exceptions to the transfer penalty rules, such as the Family Caregiver Exemption that can protect the family home under certain circumstances, or other planning avenues available that serve to convert assets to income and accelerate Medicaid eligibility while preserving 40-60% of assets on average. These and other potential options should be thoroughly explored before throwing up your hands in defeat.
Myth – If I add a joint account holder to my bank and/or investment account, at least half of the account will be protected from nursing home spending.
Many parents believe that adding their son or daughter as joint owners on their accounts will protect those accounts from having to be spent down. However, under Pennsylvania law, a joint account is considered to be owned based on the proportion of the contributions to the account. Therefore, a child would have to prove that he or she contributed to the account, or the whole account value would be considered an “available resource” and would have to be spent down.
Myth – If we transfer all of the assets into the healthy spouse’s name (the Community Spouse), they will be protected from the nursing home costs of the sick spouse (the Institutionalized Spouse).
Medicaid generally views the assets of one spouse to belong to the other spouse (with some exceptions, such as IRAs). So while this approach may provide benefits not related to long term care spending, it will likely not protect assets from the nursing home costs of the Institutionalized Spouse.
Myth – If I receive Medicaid benefits, the nursing home will provide a lower standard of care.
Family members commonly express the concern that their loved ones will begin to be treated poorly at the long term care facility when their payment status changes from “private pay” to “Medicaid.” Fortunately, this fear is unfounded and federal law specifically prohibits such discrimination and any change to the level of care based on the source of payment.
This brief discussion is merely the tip of the iceberg when it comes to all of the intricacies involved in effective Medicaid planning. You should never try to navigate the labyrinth of protecting assets from nursing home spending yourself. The assistance and counsel of an experienced elder law attorney is crucial to ensure that you make informed, smart decisions.
If you want to learn more about protecting assets from long term care spending, contact the Elder Law Solutions® team at Unruh, Turner, Burke & Frees. We have been assisting clients with Medicaid qualification and asset protection for over twenty years. Call us today at 610-933-8069 to schedule an in-depth consultation to review your case and provide you with a custom-tailored plan for your particular circumstances.
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