Paying for Long Term Care in Nevada using Medicaid and Asset Protection Trusts

Long term care in a nursing home or assisted living facility in Las Vegas, Nevada, can be expensive. Some facilities charge as much as $10,695 per month for dementia patients requiring around the clock care.

Many families feel the burden in two ways: first, they may feel they are not following the patient’s desire to stay at home, and second, they are concerned that the high cost of care will deplete the patient’s savings, leaving nothing for the family as they had wished.

By planning ahead, families have about ten options to help protect their savings from high nursing home costs, to qualify for government long term care benefits like Medicaid earlier, and to allow family members to supplement the cost of care and improve the patient’s lifestyle using his or her savings.

This article discusses the benefits of qualifying for Medicaid, why planning in advance is important, and who should consider an asset protection trust to prevent the cost of long term care from depleting their life’s savings.

Medicaid is not just for the poor

Contrary to popular belief, Nevada Medicaid is not just a healthcare program for the poor. Instead, it pays for nursing home care for about 70% of people in long term care and assisted living facilities. Because the cost of assisted living facilities in Las Vegas can be thousands per month, many people can only pay for a short time, and then they must qualify for Medicaid. That is, people who were formerly middle class often qualify after a short stay in a nursing home.

How does Medicaid work to pay for a nursing home?

Medicaid will pay for a nursing home for a patient that has a medical need and a financial hardship. Medical need in Nevada is determined by a pre-admission screening resident review.

If there is a medical need, then a financial review is performed.

It is important to know that Medicare does not pay for long term care, except for limited periods of time if there is a qualifying medical need. Dementia is not a qualifying condition for Medicare long term care benefits.

How to qualify for Medicaid in Nevada (financial qualifications for Nevada Medicaid)

Medicaid has strict income limits and asset limits in Nevada. The requirements change slightly on a yearly basis. For single people, the value of bank accounts and other assets must be less than $2,000. Monthly income must be below about $2,200.

The spouse of a person qualifying for Medicaid is entitled to Nevada’s community spouse resource allowance. This is an amount of assets over $2,000 that the community, or healthy, spouse is allowed to keep that does not disqualify the other spouse from Medicaid long term care benefits.

Also, the spouse of a person qualifying for Medicaid’s Minimum Monthly Maintenance Needs Allowance. This is an amount of income that the community spouse gets to keep each month without disqualifying the other spouse from Medicaid.

The Medicaid recipient also gets to keep a small amount of income each month (about $35) as a Personal Needs Allowance. All other income must go to pay for the cost of care. If you are wondering how much Medicaid pays for long term care, the answer is, the rest of the bill after applying the patient’s income.

Income or Assets too High to Qualify for Medicaid

Just because your income is too high to qualify for Nevada Medicaid does not mean that you cannot become qualified for long term care benefits.

This is also true if you are wondering how to qualify for Medicaid if you have assets worth more than the limit.

For example, if your income is too high to qualify for Medicaid, there are certain items you can purchase and people with whom money can be shared to reduce income enough to qualify. Income over the qualifying amount is called “Medicaid Excess Income.”

If your assets are too high, there are options to qualify for Medicaid other than spending money on expensive nursing home care until you run out of assets. This method is called “spend down” and many people do not realize that there are alternatives to spend down. Nevada Medicaid spend down rules are complex and testing them should not be attempted on your own.

As is true of many things in life, planning ahead is the best way to avoid the Medicaid spend down. But first, it is important to understand that not all assets count toward the asset limit.

Medicaid Exempt Assets in Nevada

The Nevada Medicaid application requires you to list all of your assets. However, not all of these assets count toward the $2,000 (or higher, if you are married) limit.

For example, a life insurance policy with no cash value may be exempt for Medicaid purposes.

In other words, the life insurance policy is a non-countable asset for purposes of Nevada Medicaid.

Some annuities are Medicaid-qualified annuities that change assets to income in the eyes of Medicaid.

The most common question of all: Is my personal home a countable asset for Medicaid?

The answer is, it depends. Some factors include the total value of the home versus what it is worth, whether you intend to return home, and who else lives there.

This article discussed Medicaid trusts below, but for now, a personal residence outside a trust may be exempt for Medicaid. The downside of this exemption is the home may be subject to Medicaid estate recovery, in which the state can lien real estate to recoup costs spent by the state for a nursing home resident.

Planning ahead to avoid Medicaid spend down

After looking at your total assets, and then exempt assets, Nevada Medicaid considers the last category of assets: countable resources. Every dollar of countable resources must be spent before you qualify for Medicaid. This is the “spend down.”

For families who plan in advance of applying for Medicaid, anywhere between five years and one month, it may be possible to avoid Medicaid spend down.

Can I gift my home or bank account to family to qualify for Medicaid and avoid spend down?

The Medicaid office is aware that people try to gift away their property and assets to qualify for long term care. As a result, there are Medicaid asset transfer rules that impose a penalty divisor for giving away assets.

This means that for every approximately $8,000 gifted, a one-month penalty is imposed. This means that a person who otherwise qualifies for long term care under Medicaid must pay for their own care out of pocket for one month.

As you can see, the Medicaid penalty for gifts means gifting is not the best way to qualify most of the time. If you are concerned about qualifying because you have made gifts in the past, the time since the last gift will be an important factor to consider.

The Five-Year Rule or Medicaid Lookback

The Nevada Medicaid asset transfer rules look at transfers and gifts made in the five years prior to the application date. For every transfer, the penalty divisor is applied to determine the number of months the applicant must pay for his or her own care.

On the bright side, gifts made more than five years prior to the application period are not subject to a Medicaid penalty. The five-year lookback period to qualify for Medicaid is an important reason to plan ahead for the possibility of needing long term care benefits. Although we cannot predict the future, Nevada residents can use the five-year period and asset planning strategies to qualify for Medicaid sooner, while minimizing the dreaded spend down. One way to do this is a Medicaid trust.

There are strategies for people who need to qualify for Medicaid sooner than five years as well.

Medicaid Trusts

You may have heard of wills and trusts for estate planning purposes. Some are Medicaid qualified trusts, which means that the assets held in this type of trust do not count toward the asset limit. Not all trusts qualify, and in fact, the common “revocable living trust” or “living trust” does not. The assets in a revocable living trust are countable assets.

Medicaid trusts are also called spend down trusts because instead of giving money to a nursing home, it goes into a trust. However, this usually must be done in advance of needing care, because a transfer to a trust is subject to the penalty period unless it was more than five years ago.

Medicaid trusts allow you to set aside assets for your family members while qualifying for Medicaid earlier by reducing your countable assets.

Income trusts

Another type of trust is an income trust that helps meet the Medicaid monthly income limit. This trust only works in some states, and luckily, Nevada Medicaid income trusts are available here because it is an income cap state.

Crisis planning

If you need Medicaid now and you have assets, you can hire an elder law attorney to perform Medicaid crisis planning.

With careful planning, your elder law attorney can make certain gifts and transfers and change the nature of your assets to income to help qualify sooner and to minimize the spend down amount. This is a complex area of law that should not be attempted on your own.

Denied for Medicaid

It is possible to be denied Nevada Medicaid long term care benefits. It is possible to reapply for Nevada Medicaid.

There are three reasons to be denied. First, income is too high and an income trust is needed.

Second, assets are too high, and you need to spend down or use crisis planning. Third, a transfer was less than five years ago or was not the right type of transfer, and a penalty period will be imposed prior to receiving long term care benefits.

The most common question is whether a patient can be evicted from a nursing home if they are denied Medicaid. The answer is no.

What to do if you are denied Medicaid long term care benefits

You are entitled to appeal a Medicaid denial. A “fair hearing” process can be used to appeal, and if Medicaid is not approved, the case can be transferred to court for a judge to decide.  

How to apply for Medicaid in Nevada

Once you are sure that you qualify, or after you have worked with an elder law attorney to avoid spend down, the Medicaid application begins by calling the Department of Health and Human Services Division of Welfare and Supportive Services (DWSS). They will take certain information over the phone to begin the process. How long it takes to get approved for Medicaid in Nevada depends on many things, but it is safe to assume it can be a three-month process at least.

Once you are approved, Medicaid may pay for the last three months of long term care expenses prior to approval.

Medicaid home and community-based waiver services

If your elderly parent refuses to go to a nursing home or would rather stay home, there are alternatives. Nevada Medicaid offers alternatives to nursing homes for some assisted living facilities and home-based care. A Medicaid application is still required for these services and all Nevada Medicaid eligibility requirements must be met.

Medicaid Lawyer in Las Vegas, Nevada

If you need assistance with Medicaid planning, crisis planning, or have questions about whether your trust is Medicaid qualified, please contact Origins Legal Group for a free consultation at 702-850-7799. We offer flat fee Medicaid planning services and assistance with Medicaid applications.