Medicaid is known as a program for medically needy people who are impoverished. Nevada’s Medical Assistance to the Aged, Blind, and Disabled is no exception- but it is important to understand what Medicaid considers “impoverished.”
Nevada Medicaid income and asset limits
For the most part, families who need long term care are told they must meet the following Medicaid income and asset limits to qualify: about $2,000 per month income and less $2,000 assets for a single person. Well-meaning case workers and Medicaid personnel usually tell the family to “spend down” until the asset limit is met, and turn away families who have income over the limit.
In reality, families who have more than these limits should be directed to an elder law attorney who is versed in the definition of “impoverished.” Many people are surprised to learn that, in fact, people with higher income and assets are routinely approved. Often families do not discover this information until they have spent significant amounts of money on medical care unnecessarily.
A Las Vegas elder law attorney can create a strategy to help you protect your income and assets while still meeting the eligibility requirements for Medicaid. Origins Legal Group, for example, uses an effective combination of legal tools to help you access Medicaid, without having to spend your life savings on medical care.
The ways to qualify for Medicaid may include converting countable assets, using estate plans that have lifetime benefits, spending on personal and exempt items, and purchasing certain types of annuities.
Countable Assets for Nevada Medicaid
The Nevada Medicaid application for long term care benefits asks if you have any of these common assets: a personal residence, checking and savings accounts, life insurance, revocable living trust bank accounts, certificates of deposit, retirement accounts, savings bonds, and stocks.
The value of these items is countable toward the Medicaid limit for a single person. For married people, even if the spouse who needs long term care does not appear on these accounts, the assets are still counted toward his or her asset limit. This is true even if the property or account is “separate property,” and not community property.
For married people, there is some protection for the home, but Medicaid can place a lien on it after the death of the spouse who needs long term care. An elder law attorney can help you plan for this “estate recovery” on your personal residence.
An effective Medicaid qualification strategy can protect these assets from healthcare costs by changing them from countable to “exempt.” Please note: giving away assets or taking names off the accounts does not accomplish this, and in fact, for every $8,000 gifted or in accounts where the owners are changed for the last five years, the Medicaid applicant has to pay for care out of pocket for one month before Medicaid will help. This penalty period should be avoided if possible! Gifting and re-titling should not be done without the help of an elder law attorney.
Estate Plans and Trusts for Nevada Medicaid Qualification
When it is time to qualify for Medicaid, we advise clients that we can create two trusts to make countable assets and income exempt. In response, we almost always hear, “I already have a living trust.”
A living trust is revocable, which means that in the eyes of the Medicaid office, the assets in the trust are countable toward the limit.
In fact, while living trusts have some benefits (mainly, avoiding probate and ensuring that your assets go to the people you have chosen without court intervention), they are ineffective for making sure you have assets left to give after you pass! For this reason, we highly recommend that people over the age of 65 upgrade their estate plan, as follows.
Nevada has important laws on trusts that many states do not. In fact, Nevada trust laws allow elder law attorneys to create what we call “estate plans with lifetime benefits.” These trusts are not the same as revocable trusts and because of their specialized nature, cannot be purchased on document preparation sites. They are custom drafted by an elder law attorney to help save tens of thousands on long term care costs if long term care is ever needed.
Occasionally, we will use these trusts at the time of the Medicaid application, but they are most effective when created five years in advance of the need for long term care. For example, we work with families who recently received a dementia diagnosis while the patient is still capable of speaking for him or herself.
Long term care trusts are not the only way we use trusts to access long term care benefits under Medicaid. In some cases, a Medicaid applicant will fund a trust for a special needs family member, such as a grandchild with autism. This is a penalty free way to change the nature of the assets from countable to exempt, without having to spend it on long term care.
Finally, we encourage families to purchase irrevocable burial contracts, which are like a trust for burial needs, because the cost of services continues to rise. Most families end up spending on these services anyway, and this is yet another way to change assets from countable to exempt by spending on something the family will benefit from, rather than paying for long term care.
Purchasing Personal and Exempt Items to Qualify for Medicaid
Sometimes, when all other strategies have been exhausted, there may still be assets left. In this case we suggest that families use the money that would otherwise have to be spent down on long term care to purchase things they need and which are exempt. This could include new hearing aids, remodeling a bathroom to be more accessible for the spouse who will stay at home, and upgrading the family car. If the family needs legal services, such as a guardianship proceeding, revisions to the estate plan, in addition to the Medicaid planning, it is a good time to purchase those items as well, with money that would otherwise have to be spent on care.
Nevada Medicaid does allow limited use of annuities to qualify for long term care benefits. With an annuity, you pay upfront a sum of money, and then receive a stream of payments for a certain period of time. For families who still have assets over the Medicaid limit after using the strategies above, purchasing an annuity with the rest of the money may be a good solution.
Please note: traditional annuities will not work. There are specialized Medicaid annuities that meet complex requirements set by the federal and state governments.
Medicaid annuities have a few downsides that should be discussed carefully with an elder law attorney before applying.
We have written before about the goals for Medicaid planning. In short, most families agree that it is better to preserve assets that would otherwise have to be spent for long term care using strategies like those outlined above, while still qualifying for Medicaid. At $7,500 to $14,000 per month for nursing home care costs in Las Vegas as of late 2017, the money goes a lot further in the hands of the family than it does in a nursing home.
If you are applying for Medicaid long term care for yourself or a family member, contact us today for a confidential and free consultation. We offer flat fee options for Medicaid planning services, from writing a strategy you can implement, to applying for you and working with the Medicaid office on your behalf.
Contact us at 702-850-7799 to schedule your appointment.