Medicaid Asset Protection

In addition to setting up proper estate and nursing home planning, Medicaid asset protection may be necessary. In Missouri, what was previously named Medicaid is now known as MO HealthNet

Some of a person’s assets can be saved when a family member goes to a nursing home. However, this is a very complex area of law, and no two people have the same circumstances. A consultation with an attorney practicing in the area of Elder Law can save you time and money. 
Generally, there are two types of Medicaid planning: planning in advance and crisis planning. Crisis planning refers to what assets can be protected after a person has already entered a nursing home.

If you have questions about these services or would like to schedule a consultation with our attorneys, please give us a call today. We would be honored to assist you.

Planning in Advance

Medicaid (MO HealthNet) has a 5-year look-back period. To protect your assets from being spent on nursing home care, they must be transferred out of a person’s name five years before entering a nursing home.

You can protect your assets by gifting money and property to trusted family members or using an Irrevocable Medicaid Asset Protection Trust.

Nurse with a senior woman

Medicaid Asset Protection FAQs

How does an Irrevocable Medicaid Asset Protection Trust work?

Medicaid, or MO HealthNet in Missouri, has a 5-year look-back period for gifting. That means if you gift away all of the assets today, in five years, you will qualify for Medicaid to assist with paying for a nursing home without being penalized for the previous gifting of assets. Proper planning allows people to shelter their assets for their families instead of self-paying for all of their long-term care costs. 

However, irrevocable trusts are not always desirable. When you gift assets to a Medicaid-compliant irrevocable trust, you will lose control of the assets. The trustee or trustees of your trust would have sole control. 

Placing assets in an irrevocable trust does have benefits over a direct gift to a person due to the creditor protection clauses contained in the irrevocable trust, which most likely would shield the assets from the creditors and bill collectors of the beneficiary (until the assets are transferred out of the trust directly into their name). Also, trusts allow multiple trustees to have shared control, creating more asset protection.

How Can We Save the Family Farm?

One of the most popular assets to protect is the family farm. Most people do not wish to use a family farm to fund their retirement or long-term care and instead intend to leave it for future generations. 

Transferring ownership to an Irrevocable Medicaid Asset Protection Trust does not bother most parents since they do not consider the farm their personal asset anyway. The primary issue to remember is that the farm owners need to have five years pass between the transfer of the farm and an application for nursing home Medicaid benefits.

Crisis Planning

When planning does not occur in advance, some parents still wish to strategically gift their assets at the last minute to save as much as possible for their children. 

This can happen immediately before entering a nursing home or after having already entered one. Each person has different goals, and there is no correct answer when formulating a nursing home plan. 

For parents with a primary goal of saving assets for their children, far more than they realize can be saved even at the last minute. However, to save assets, selling off and liquidating property and retirement savings usually becomes necessary.

Crisis Planning FAQs

How do I spend down assets to qualify for nursing home Medicaid?

A valuable planning strategy after a person has entered the nursing home is to spend resources to purchase allowable items (known as exempt assets) before applying for vendor MO HealthNet (nursing home Medicaid) benefits.

Suppose a person has not yet purchased an irrevocable pre-need funeral/burial plan or irrevocably assigned a life insurance policy to a funeral/burial plan agreement. In that case, they can do so without penalty by following special Medicaid guidelines. The purchase of an automobile (or upgrade of the current automobile) may be made. If a healthy spouse remains in the home, money may be used for home improvements and upgrades. Paying debts is an additional way to spend down assets.

How can married couples protect the assets of a healthy spouse?

Both partners’ assets are counted when qualifying for vendor MO HealthNet (nursing home Medicaid). Therefore, placing assets in only one of their names will not shelter those assets. 

For married couples where one spouse remains in the home, only a certain amount of the assets may be kept by the healthy spouse. The remaining assets must be strategically spent using qualified exceptions to the Medicaid rules. Sometimes, this is accomplished by turning assets into income. An Elder Law attorney can usually assist a spouse in protecting nearly all assets in most circumstances.

How do I protect the assets of a single person?

Nursing home planning for the single person involves balancing gifting with the 5-year look-back period. Gifting is not prohibited; instead, it creates a penalty period preventing immediate qualification for nursing home Medicaid (or vendor MO HealthNet). 
By balancing the gifting away of some assets while converting other assets into an income stream, the nursing home can be paid for with a person’s own money while waiting for a penalty period to expire. These are complicated techniques used by Elder Law attorneys, but strategies can usually be utilized at the last minute to save at least some portion of the assets.