Jill’s father died many years ago, and for the past year, she’s been caring for her 83-year old mother, Mary, who was suffering from Alzheimer’s disease and mobility problems. As a result, Jill quit her job and moved Mary in with her to take care of her mother full time because at that point she needed 24-hour supervision. Jill has five siblings who live in other states, all of them visit Mary several time each year and provided care for Mary and respite for Jill.
Mary’s total assets are approximately $500,000, the majority of which is home equity. Mary then decided it would be best to sell her home and move to a long-term care facility. After the house sold for $350,000, Mary moved into a long term care facility and her children applied for Medicaid on her behalf.
Upon application for Medicaid, Mary was told by the Medicaid Caseworker that she would not qualify for Medicaid until she spent down all of her money to less than $4,000. Furthermore, the Caseworker indicated that all of her money should be spent down on her cost of care in the facility (although there are permissible alternatives to spending all the money on care, which Medicaid may not inform you). Upon hearing this information, the family spoke to friends who told them Mary should have transferred the home to her children years ago to prevent this situation, and there is nothing to be done at this point.
Distraught, the family sought advice and discovered there is still an opportunity for some asset protection planning. With proper planning, it is possible to save at least half of the sales proceeds of the home, and even more (depending upon some other criteria), and still qualify for Medicaid. The only difference from the Caseworker’s suggestion which depleted Mary’s money to less than $4,000 is that, with guidance and proper planning, Mary’s children can preserve over half of her assets, while Mary is still eligible for and receiving Medicaid. During this time, Mary only pays her monthly income to the long-term care facility (which is almost always much less than the private pay rate) and Medicaid covers the cost of her care beyond that amount.