FAQ - Medicaid & Protecting Assets

I am WECTU's Eldercare Answerman. My FAQs discuss many of the primary issues that we have to address when assisting our loved ones as they age. For more indepth topical information, please check out my Blog, my Podcasts and my Elder Care Search Wizard.


If you have a specific request regarding a topic that I have not addressed, please use the form at the bottom of this page to contact us with your request.


1 – My father had a stroke he would likely need to continue living in the nursing home for the foreseeable future is it too late to protect his hard-earned assets?

It is never too late to begin taking steps to protect your father’s hard-earned assets. His assets can be transferred even after he has entered a nursing home. The transfer will trigger a penalty based on the Medicaid rules in effect at that time. You should be able to protect at least one-half of his assets even after he is permanently placed in a long-term care facility. The key document that needs to be in place is a comprehensive power of attorney that provides that the power holder can make gifts on behalf of your father to members of the family. It is most important to consult with an elder care lawyer to choreograph and implement a cogent Medicaid planning strategy.

Related blogs: Medicaid Annuity , Estate Planning Meetings , The Advanced Healthcare Directive

Related podcasts: Single Person Medicaid Issues , Medicaid Protections for a Healthy Spouse


2 – My stepfather was recently placed in a nursing home. He has been married to my mother for only two years. The nursing home is asked my mother for a list of her assets. Should we be concerned? Will she need to spend her assets on his long-term care stay?

Your mother finds herself in a precarious position. Under the Medicaid rules, her resources and assets are deemed to be family resources subject to being spent on your stepfather’s nursing home stay. In  many states, a prenuptial agreement will not preserve or protect your mother’s assets from your stepfather’s nursing home stay. There are ways to preserve and protect your mother’s assets depending on her state of residence. You should arrange for her to meet with a top-flight eldercare attorney in order to protect your mom’s hard-earned assets. As an aside I generally recommend that when parties decide to marry later in life that they each purchase long-term care insurance spanning five years giving the healthy spouse time to preserve and protect their assets in the event of their love ones long-term care stay.

Related blogs: Medicaid Annuity , Prenuptial Agreement , Liability for Long Term Care

Related podcasts: Medicaid Protections for a Healthy Spouse , Gift Issues , Blended Families


3 – I am 80 years old and my brother is 86 and in bad health. He has allowed me to live with him for the past 10 years. What will happen to me if he needs to go to a nursing home?

Under the Medicaid rules, your brother’s house is deemed to be an eligible resource and subject to either be sold or to having a lien placed on the property during his stay in the long-term care facility. There is a way that you can be protected. If your brother were to convey a small 1 or 2% interest in his home to you and given the fact that you have lived together for over one year, then the home would be a protected {exempt} resource and not subject to the Medicaid spend down laws

Related blogs: Selecting a Fiduciary

Related podcasts: Single Person Medicaid Issues , Gift Issues


4 – I’m in my 70s and have a 48-year-old disabled daughter who lives with me. We have always lived together. What can I do to protect my assets for her in the event I either go to a nursing home or pass away?

What you’re asking her are two distinctly different questions. With regard to your passing way, you should take immediate steps to implement what is known as a special needs trust for the benefit of your daughter. This can be done within the framework of your will or another estate planning document. At the time of your death a purely discretionary trust can be implemented where the trustee maintains total control over the use of the funds in the trust for the benefit of your daughter. In this way, the funds can be made available for her benefit during her lifetime without governmental intervention. It will also protect her ability to access state, local and federal benefits. At the time of her death, the funds can be passed to other beneficiaries in your family as designated in your final estate planning documents.

The eldercare considerations raise a whole different issue. Under the Medicaid law assets can be transferred without penalty to a disabled child so long as she meets certain criteria. The major problem with the implementation of the strategy is that it can affect your disabled daughter’s ability to receive governmental benefits due to her condition. You may want to consider utilizing what is known as a life estate deed without powers with the beneficiary being an intervivos special needs trust for the benefit of your daughter. Rather than naming your daughter as the remainder beneficiary, you would name the trust as a beneficiary. In this way, you could protect the residence for the benefit of your daughter. You may also consider adding funds to the trust for her benefit. The federal government recently passed new legislation which allows family members to pass up to $100,000 for the benefit of the disabled family member either during their lifetime or at death into a special ABLE account. You must make certain that this legislation has been adopted by your home state which was required by the federal/ statute order to be effective.

Related blogs: Special Needs Trust , Power Of Attorney , The Advanced Healthcare Directive

Related podcasts: Beneficiary Designation , Single Person Medicaid Issues , Power of Attorney


5 – My dad’s health is failing my mom is younger than he is and is in relatively good health. If he needs to go to a nursing home will my mom lose both her house and their joint assets?

My answer to your question is that the assets accumulated by your parents can be totally protected for your mother in the event your father’s health begins to fail and he ends up in a nursing home. It is most important that they implement well-written powers of attorney which are comprehensive and allow for gift-giving to family members. A transfer of assets between spouses does not trigger a Medicaid transfer penalty when implementing the five-year look back period. Subsequent to your father’s entry in the nursing home, the primary residence can be transferred to your mother’s name and it will become a protected resource. There are other planning techniques available such as Miller trusts, or immediate annuities which are tools used in various states to protect the remaining assets for the benefit of your mother. At the time that either of your parent’s health begins to deteriorate, it is critical that you find a top-flight eldercare attorney who is knowledgeable in the laws that pertain to your state who can implement a roadmap which will allow your family to protect your parents assets for the benefit of your mother.

Related blogs: Power Of Attorney , Medicaid Annuity , Liability for Long Term Care

Related podcasts: Eldercare Tax Issues , Medicaid Protections for a Healthy Spouse , Power of Attorney


6 - My wife is suffering from ALS. She will need to be transferred to nursing home in the near future. Will I lose my government pension to the nursing home?

The answer is no. The pension that you receive is income. In those states that are not Income cap States, the income derived from the federal government is yours and is not considered when attempting to qualify your mother for Medicaid. In in those states that consider family income when qualifying a spouse for medical assistance, you will need to do some sophisticated planning. There is a concept called Miller Trust which can be utilized to help to protect your pension income. It is always wise to consult with a knowledgeable eldercare attorney when confronted with these kinds of issues.

Related blogs: Medicaid Annuity

Related podcasts: Medicaid Protections for a Healthy Spouse


7 – The nursing home is asking me to sign my dad’s application for admission. Can I be held liable for his cost of care?

My answer to this question is that in the vast majority of cases you cannot be held liable for any of the costs of your loved one’s care in the nursing home. There is one exception. If you do not use your parent’s funds appropriately within the framework of the very complex Medicaid rules dealing with their long-term care stay, you may be liable for the misuse of their funds.

Related blogs: The Nursing Home Agreement , Liability for Long Term Care

Related podcasts:


8 – My dad made a gift to my daughter $14,000 this year. He said that the law permits him to make such a gift. I have been told that it may be subject to a gift tax or income taxed to me and my family. I also heard that there may be some sort of penalty if my dad goes to a nursing home. Will this gift create either a problem for my family or my dad?

You’ve asked two very good questions. The gift known as the annual gift is not subject to a gift tax provided the amount does not exceed $14,000 for a single gift. A person can make a $14,000 gift to as many people as he or she desires during a calendar year. If the gift exceeds $14,000, then it is subject to a gift tax. At the same time, the person making the gift can tap into the $5,490,000 lifetime gift exemption which is available to all taxpayers. The moral to the story is that as long as the gift does not exceed $5,534,000 that there will be no gift tax. There is no income tax to the recipient of the gift unless they have received and appreciated asset that they choose to sell in which case it would be subject to a capital gains tax.

The Medicaid transfer penalty laws will also impact the gift made by your father. If your father enters a nursing home within five years of that gift and applies for medical assistance then he will be assessed a penalty for the transfer to you which  is for less than fair market value. The penalty for the transfer will vary from state to state.

Related blogs: Aid And Attendance VA Benefit , Beneficiary Designation

Related podcasts:


9 – My mother’s health is beginning to decline. She lives in a condominium which we would like to keep in the family condo. If she needs to go to a nursing home will we have to sell the condo?

The hard fact is that the condominium will be deemed to be an eligible resource and subject to being sold with the proceeds spent on the long-term care facility. In many states, the condominium could be retained but the state would put a Medicaid lien on the condominium. You may want to meet with and elder care expert and develop a strategy in order to begin to protect the condominium pursuant to the five-year look back and Medicaid spend down rules. A tool that you may ultimately consider is what is known as a life estate deed giving your aunt the right to live in the property with no power to sell, encumber or transfer the property while designating the children as the remaindermen.

Related blogs: Care Management Agreement , Life Estate Deeds , Geriatric Care Manager

Related podcasts: Life Estate Deeds , Gift Issues , Selecting a Fiduciary


10 – My mom added our names to her bank accounts, US savings Bonds and her Fidelity account. Are these assets protected if she goes into a nursing home?

The key when determining whether assets are protected under Medicaid rules would be to determine where the assets originated. In this case, the assets were your mothers. Given the fact that they are subject to anyone’s order including your mother’s means that the assets will be deemed to be hers and subject to being spent on the nursing home. If the assets were titled in such a way that it required everyone’s signature before the funds could be accessed, then it would not be subject to being spent on the long-term care facility with one caveat. If the transfer took place within five years of your mother’s entry into the nursing home, then the transfer would render her ineligible for a period of time for receiving medical assistance.

Related blogs:

Related podcasts: Gift Issues , Single Person Medicaid Issues


11 – I’ve heard of the concept called a five year look back with regard to asset transfers. My parents have made gifts to family members over the last few years. Will they be impacted by this five year look back rule?

An important term to consider is the concept of a transfer for less than fair market value. Such a transfer is subject to what is known as a Medicaid transfer penalty. What happens when you apply for medical assistance, is that they will require you to show all of your parents financial records over the previous five year period. If they determine that there was a transfer for less than fair market value during the previous five years after reviewing all of the financial records of your parents, it will render them ineligible for medical assistance for a specified period of time.

Related blogs:

Related podcasts: Medicaid Protections for a Healthy Spouse , Eldercare Tax Issues


12 – My father served in the Korean War. He never actually went to Korea to fight. He was stationed in Hawaii during that war. I’ve heard that he may be entitled to some sort of veterans benefit to help with his cost of home healthcare. Have you ever heard of such a benefit?

There is a benefit that is available to veterans who served in World War II Korea or Vietnam. The veterans benefit is known as aid and attendance. It makes funds available to both the veteran and in certain cases his or her spouse in the event that they need homecare assisted living or nursing home care. One need not be deployed to Korea and participate directly in the war in order to be eligible for this benefit. You need only to have served during wartime. The veterans administration Internet site will show you the exact dates that are deemed to be the term of the Korean War.

Related blogs: Aid And Attendance VA Benefit

Related podcasts:


13 – My aunt’s health has started to decline. The bulk of her assets are in a bank account earning less than 1% per year. I am her power of attorney. Can I and should I move her funds to help to increase her earnings in order to pay for her increasing cost of care?

This is always a tough situation. Many senior citizens become very conservative when investing their funds. Using the power of attorney implemented by your aunt, you should be able to manage and control her investment portfolio. You could develop a strategy with the third person in this case a well-qualified financial planner to try to enhance your aunt’s total investment return. One problem is what I call the psychosocial issue. What impact would it have on your aunt and your relationship if you in fact took this approach and abandon her ultraconservative strategy. A lot depends on her interest in overseeing the investment of her funds and her mental acuity. In my opinion you should always prioritize the relationship aspect with your aunt over your zeal to improve her overall total return.

Related blogs: Power Of Attorney , Revocable Living Trust

Related podcasts: Selecting a Fiduciary , Power of Attorney


14 - My mother died 10 years ago. My father met another woman who we married just a few years ago. At that time, he implemented a prenuptial agreement. Are his funds protected if his new wife goes into a nursing home or of my father predeceases her?

If your father dies first, the terms of the prenuptial agreement will cover those assets held in his individual name. If he has directed those assets to the children of the first marriage then you will be the beneficiary of his largess. If his new wife enters a long-term care facility, then it will depend on the state in which they live. In certain states, such as Maryland, a prenuptial agreement does not protect his assets from her long-term care stay. His assets would be grouped with hers in order to determine their overall family assets under the terms of the Medicaid rules in that state. In Maryland, his assets would be subject to being spent on her long-term care stay.

Related blogs: Prenuptial Agreement

Related podcasts: Eldercare Tax Issues


15 - My husband is about to go into a nursing home. Our attorney is recommending that we prepay both of our burial costs. Is this a wise choice?

Your counsel is giving you good advice. If you prepay both your husband’s and your burial, then you will be protecting those assets pursuant to the terms of the Medicaid law. Each state will have a different rule that impacts the amount that you are allowed to prepay to the funeral home. If you follow your state law, then the portion the you are permitted to pay to the funeral home will be deemed to be an exempt resource and protected from being spent on your husband’s long-term care stay. In most cases families prepay both parties’ burial. It also takes the pressure off the family when dealing with an unexpected and untimely death. They can select the appropriate burial without undue pressure.

Related blogs:

Related podcasts: Medicaid Protections for a Healthy Spouse


16 - My mother has a life insurance policy and has paid the premium religiously over the past 35 years. Things are getting a little tight and I was wondering whether she should continue paying this premium.

It sounds to me like she is build up quite a bit of cash value within the framework of the policy provided it’s what is known as a whole life insurance policy. If so you have several different options. First you could ask the company whether the policy can pay the premium by using the cash value that is accumulated and the interest that is earned annually on the policy. You could also inquire whether your mother could take a totally paid up policy. If you obey considerable cash value that is accumulated then you may also be able to borrow funds from the policy at a low interest rate while also keeping that policy in effect. You should discuss these options thoroughly with your life insurance agent and/or financial planner before making a final decision. One other thought would be to consider swapping the life insurance policy for an investment annuity on a tax-free basis.

Related blogs:

Related podcasts: Primer on All Insurance


17 - My wife is in a nursing home and I am afraid that a large chunk of our assets will be lost due to her long-term care stay. A family friend has suggested some sort of annuity that can be utilized in order to preserve and protect some of the funds for my benefit. What on earth are they talking about?

The vehicle that they are speaking about in a state that does not consider income as one of the tests for eligibility for Medicaid is known as an immediate annuity. This specially designed annuity converts your investment in assets to income. In certain states income payable to a healthy {community spouse] spouse is not subject to the Medicaid spend down rules since it is deemed to be an exempt resource. The principle and income is normally paid to the healthy spouse over a five-year period. If you were to pass away at some point during that five-year period, then the funds may be subject to a claim by the state in which you live. After the five year period ends, with proper planning you can protect your assets from being lost to a long-term care stay.

Related blogs: Medicaid Annuity , Medical Expense Deductions

Related podcasts: Medicaid Protections for a Healthy Spouse , Eldercare Tax Issues


18 - I am 66 years of age. My husband is 80 years of age. He is recently entered a long-term care facility. It is unlikely that he can return to our rental home. My attorney mentioned to me that I could use a portion of our funds to purchase a condominium. Is that a wise strategy?

What your attorney is advising you to do is to take an eligible resource that would have to be spent on the nursing home care for your husband and purchase a personal residence. Under current Medicaid law, your primary residence is deemed to be an exempt resource and not subject to the Medicaid spend down rules. Keep in mind that assets can be transferred between spouses without being subject to any transfer penalty during the five-year look back period. In this case, any funds that are used to purchase a primary residence on your behalf will be fully protected for you the community spouse and added to those other assets that are exempt under your states’ Medicaid rules.

Related blogs:

Related podcasts: Medicaid Protections for a Healthy Spouse


19 - is there any problem with putting my children’s names on each of my bank and my fidelity accounts?

There are several problems that you may want to think about. If you have a child that has financial problems, then their creditors may attack the accounts containing their name. Children with addictive personalities or who develop physical or mental disorders in the future could negatively impact your assets. Your assets could be considered their resources subject to spend down rules impacting governmental benefits. If your child was in a serious car accident that they caused, then and in that event your assets could be subject to the claims of the injured party. You should never add a person’s name to your account without a thorough discussion with a competent estate or financial planner. The exception may involve your personal checking account. If you were to become ill, you would certainly want to allow someone to step into your shoes and pay your day today bills and expenses. You may also want to give a family member a power of attorney so that they could access various investment accounts in to pay your bills.

Related blogs: Beneficiary Designation

Related podcasts: Beneficiary Designation , Gift Issues , Family Disputes


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I am WECTU's Eldercare Answerman. My search tool will automatically guide you to information and answers that will assist you with resolving your specific eldercare issues.