Crisis Medicaid Planning/Sheltering Assets for People Already in a Nursing Home
What happens if your spouse is about to go into a nursing home, or is already in one?
In most cases, it is not too late to shelter assets. The pre-eminent technique concerns the immediate annuity. An immediate annuity is a financial device that converts assets into income. If a spouse is in a nursing home, an immediate annuity can usually be employed to make him or her eligible for Medicaid, while preserving most, if not all, of the assets for the healthy spouse. The law states that the spouse at home can keep half of the countable assets, or about $117,000, whichever is less, plus the home. The funds above that level need to be spent down. The rules are very complex; in general, however, if the assets above the protected level are put into an immediate annuity, the nursing home spouse becomes Medicaid eligible and the healthy spouse can keep the annuity payments. In other words, all of the assets are protected. Under the new annuity rules, if the applicant is married, then the annuity must name the state as the remainder beneficiary in the second position after the community spouse or minor or disabled child.
So, in the proper case, an annuity can still be used to make someone eligible for Medicaid; it’s just that the state is the beneficiary if the spouse dies within the term of the annuity. If the person outlives the annuity, then the state will not receive anything from the annuity proceeds, and they can be inherited by the children. Therefore, there is nothing to lose in doing the annuity. That is, if the annuity is not purchased, then all of the countable assets are subject to being spent down. With the annuity, the person can immediately qualify for Medicaid, and there some or all of the assets will be protected. It is important to note that the subject of annuities is enormously complicated, and this article only provides a very brief introduction to the subject.
There are other techniques that can be used to protect assets, all of which are related to the particulars of the situation. The point to remember is that even if your loved one is already in the nursing home, do not lose hope. It is very often possible to protect a significant amount of assets.