How to Protect Your Assets From the Costs of Nursing
"What happens if I go into a nursing home?" Have you
ever asked yourself that question?
Or worse... what happens to your spouse if YOU go into a nursing
If all your income is funneled into the nursing home, what will be
left to support your spouse who's left at home? How will he or she pay
the bills, the mortgage, insurance or property taxes?
It's a serious problem that if left unaddressed could create a lot of
stress for your spouse and family. However, there is a solution. And
this solution, nicknamed "Mama Mia," can allow you some ability to
divert income over to the spouse to support her.
This strategy, technically called a minimum monthly maintenance
income allowance, is something I learned from Medicaid expert and elder
law attorney Sean Scott (more on his cutting-edge strategies in a
The Scary Reality of Nursing Home Costs
If the price of nursing care scares you, it should. It isn't cheap. I
live and work 35 miles north of St. Paul in a small community. My
grandmother spent a short amount of time in a nursing home before she
passed away and the annual cost of this facility was $45,000.
A recent article from the AARP reported that the average cost per
year in a nursing home is "$50,000 and climbing, and it can vary widely
depending on where you live."
MetLife reported that an average annual stay in a nursing home goes
for over $77,000 annually.
That's almost $6,500 a month. These prices are scary.
Most employees' health insurance does not pay for nursing home care,
and according to the same report from AARP, about one-third of nursing
home residents pay all of their nursing home costs from their own
pockets. If you figure two, three or five years in a nursing home,
you're talking some serious money.
So what options are available? Well, there are many, but they are not
as simple as giving away your assets. That typically won't work. As a
matter of fact, Medicaid will figure that out real quickly. Here's the
biggest barrier to qualifying for Medicaid...
You Either Have Too
Many Assets or Too Much Income
If you live in an "income cap state", that state will look at how
much gross income you have coming in. If it is over the limit you will
be disqualified from Medicaid.
Some states look at income and some don't. But when they do look at
income, they can get you in two ways - either you have too many assets
or too much income to qualify.
However, there are specific strategies you can use to qualify if your
income is too high. Conversion strategies may help you reduce the amount
of countable assets... that is, if you know what these strategies are.
One strategy that elder law attorney Sean C. Scott frequently uses is
a qualified income trust, which is permitted under Medicaid laws. The
trust can allow you to divert income in order to reduce your income
below the necessary income level in which to qualify for Medicaid.
Medicaid-Friendly Strategies That In-The-Know Elder
Law Attorneys Use To Help Their Clients
If you want to protect your estate, then it is important that you
hire a competent elder law attorney in your state who's fought in the
trenches and knows what's legal and what's not.
However, because of the importance of this matter, I know you want to
do your homework ahead of time before you spend $275/hour to learn
possible options. That is why I brought elder law attorney and author of
The Medicaid Handbook, Sean C. Scott, to the table.
Inside our new program, How to Protect Your Assets From Nursing
Care Costs, Sean reveals legal strategies he's been using for 17
years to help his clients.
It's crucial you get the upper hand and learn what options are
available to you.
- Did you know that if your children write a check from a joint
account, Medicaid may see that as a transfer and disqualify you?
(Read page 32 and see why Sean says holding assets in joint tenancy
with your children is a ticking time bomb.)
- Does your Durable Power of Attorney provide ALL the right
provisions to allow your children to handle ALL of your assets?
(Don't get stuck without this one crucial provision - page 33.)
- Did you know the law changed in 2006 and dramatically limited
the way you can transfer assets? (Before you take the advice of your
neighbor and start writing checks to your children, make sure you
understand the new Medicaid law.)
- What you can do if your income is greater than your state's
income cap? (Smart attorneys use a
trust to help divert your monthly
income so you can qualify for Medicaid - page 34.)
- Here's how having a disabled child may help you qualify for
Medicaid. (page 41)
- Not all assets are treated equal. (You may be able to use these
unique strategies for converting countable assets into non-countable
assets.) (page 42)
If you would like to speak to an elder law attorney, but you're not
quite sure what to ask, then let me do the asking.
After surveying over 10,000 people over the age of 50, I uncovered
the top questions most people have about protecting their assets from
nursing home costs. Once I found the questions I hunted down one of the
country's leading authorities on Medicaid planning for the answers.