It is important to remember the Maryland Medical Assistance, or Medicaid Eligibility Rules when thinking about planning for long term care. In order to qualify for Medicaid, a single person can have no more that $2500 in countable assets. At first glance, this number is alarmingly low. You may be asking, how can anyone ever qualify with such a low figure? That is where Medicaid planning comes into focus.
One of the first considerations to take into account when thinking about Medicaid planning is the 5 year look-back period. The 5 year look-back period is a feature of the Medicaid rules where Medicaid will look at any transfers of assets in the 5 years prior to applying for Medicaid. So what does that mean exactly? That means that if you apply for Medicaid 1/1/2015, Medicaid will look at any asset transfers dating back to 1/1/2010. The transfers that they are looking for are those for “less than fair market value”, or in simple terms any gifts. Medicaid will then penalize you, meaning make you ineligible for assistance 1 month for every $7940 transferred. Given the length of time, and the severity of the penalty, many options for planning are best employed prior to needing nursing home care. Some options include a Medicaid Asset Protection Trust or Life Estate Deed without Powers, for example.
What if you need a nursing home sooner than 5 years? The next consideration is whether you are married or not. The Medicaid rules apply differently for married couples than for single people. For a married couple where one spouse is in a nursing home, the nursing home spouse still must have no more than $2500, but the spouse still living at home can keep one half of the combined assets up to $117,240 (for 2014). If this is the case, and you have not planned outside the 5 year look-back period, you still have some options for planning, including spend down and Medicaid qualified annuities.
If you are single, your planning options are more limited, but Medicaid eligibility can still be achieved.
So when do you start planning? As previously stated, it is never too early to start planning. Speak to your elder law attorney to discuss the best planning option for you.
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