Dear Mr. Premack: My husband (90) is in a nursing home and has
dementia, and I am 88. I am seeking advice on protecting our assets. We
have about $90,000 in cash, $100,500 in mutual funds, a farm worth
$300,000, a rental residence worth $95,000, our homestead, car and
personal property worth $115.000. Our income is only $40,000 annually, and
we get $17,500 a year in oil royalties. That, of course is an unknown in
the future. Will we benefit from protecting our assets at this late date?
When you say “protecting our assets” what you mean is “not
having to spend even more of our assets on nursing home care.” The burden
you face already is staggering: on average, a month in a Texas nursing
home costs about $4,300 (it can be much higher in large cities and may be
a bit lower in small towns). Over a year, that is nearly $52,000.
There are only three ways to pay for those necessary medical services.
First is to pay out-of-pocket, as you have been doing since your husband
moved to the nursing home. Second is to utilize long-term care insurance.
If you had it, you would not be asking about protecting your assets.
Instead you would have protected them by purchasing insurance that covers
this risk; but at 88 and 90, with one of you already in a nursing home, it
is too late to buy this coverage.
Third, you can seek benefits
from Medicaid. However, Medicaid is only available to elders who have
low-income and low-assets. Thus your question: is there a way to move your
assets or to protect them so that you can get Medicaid’s assistance while
your assets are preserved? There is no simple answer, and every situation
calls for specific analysis of your goals, your opportunities and your
For instance, you have about $585,500 in countable
resources, and about $115,000 in exempt resources. The countable assets
would be divided so that you get to keep $113,640 and your husband is
credited with $471,860. Your share is definitely a “protected asset” and
your exempt resources are definitely a “protected asset” so by law you
have already sheltered about $228,640.
What about the balance that
is credited to your husband? He cannot qualify for Medicaid until that
share is reduced, in a legally acceptable fashion, to $2,000. What are the
legally accepted ways of reducing that share? You can 1) spend some of it
on the monthly nursing home bill, 2) use some of it to buy other exempt
resources [like making repairs to your home, or replacing the old car with
a new model], 3) use some of it as an educational fund for your young
grandchildren, and 4) pre-purchase a burial policy, so long as the policy
is non-refundable. With those techniques, you may be able to protect some
of the funds, but not all.
Notice that I did not include “give
some of it away to your children” as a solution. There is a penalty for
transferring assets which makes the transfer undesirable. Some exceptions
exist, like transferring title to your home to a child of yours who has
lived with you for at least two years and has provided documented services
that helped keep your husband out of the nursing home for those two years.
Also notice that even when his share of the assets is reduced to
$2,000, your husband must still be low-income to qualify for Medicaid. The
checks he receives monthly cannot exceed $2,094. If his part of your
income is over that limit, you may be able to use a “qualified income
trust” to overcome the limit.
Qualifying for Medicaid is complex
and everyone’s situation is different. My best advice: don’t listen to the
anecdotal stories about what a neighbor or your barber’s sister did.
Instead, seek personalized advice from a Certified Elder Law Attorney, who
will help analyze your individual options and make unbiased
recommendations on whether you can or cannot “protect your assets” within
the rules of Medicaid law.