What Happens to Assets If You Go Into a Nursing Home?

Moving into a nursing home is a life-altering experience. It is not only about settling down to a different place but also figuring out what will become of your possessions. This is a concern that most people have, the thought of being dependent on a nursing facility for a long time and losing all their holdings. This post will assist you in comprehension regarding the protection of your assets while you are in a nursing home, and what will happen to your properties as well.

Understanding Nursing Home Costs

The average cost of care in a nursing facility is usually high. As of 2023, the most current data available shows that the average payment made for a private room in a nursing home facility in the United States was close to $9300 on a monthly basis. Which comprises over $111,000 on an annual basis. This is a figure that most families can’t support with their household budget, so they seek alternatives, such as Medicaid, to what costs. However, obtaining Medicaid still comes with so many requirements that contain income and assets and this raises the question of what happens to your possessions.

What Happens to Your Property When You Go to a Nursing Home?

You’ve got to be asking yourself what will happen to your property in case you get confined in that nursing home. Well, you don’t have to worry as nursing homes don’t take away your assets. The only thing that happens is Medicaid assesses your assets in deciding if you need help paying for a nursing home. If your assets are too many, you might have to spend all of them before the state will assist. This is termed a “spend-down”.

Medicaid Eligibility and Your Assets

Medicaid is a state-funded program designed to pay for nursing home care in case an individual qualifies in terms of income and assets. As a requirement of eligibility, most states’ total allowable items have a maximum limit of $2000 to be held contribution for a single person. If you are married, the community spouse can have more – usually up to $148,620 time now you can see how many assets a person has. The second category involves those things that the couple would have joined together including certificates from the bank, savings accounts, etc.

The other category of assets that do not count in qualifying for Medicaid would be exempt assets. This may include the main house (if a spouse or one dependent lives in there), one car, and several personal effects.

Protecting Your Assets: Legal Advice

Many of us think that if something were to happen, and we required long-term care, we would be fine simply by spending our money or assets. It’s essential to remember that there are some strategies, especially legal ones, that can help you in the future, would still protect your wealth while needing to access certain services.

Medicaid Asset Protection Trusts (MAPTs)

A Medicaid Asset Protection Trust (MAPT) can be one way to go about this. This is a particular type of trust that would allow you to put assets into the trust so that they would not count toward the Medicaid threshold. This would be relevant if you anticipate needing long-term care and have a possibility of using Medicaid at that point. However, to avoid penalties, one should have set up the MAPT at least 5 years before having to apply for Medicaid.

Spend Down Assets

You also have the option of increasing your expenditures or spending down your assets. In this case, one would be using their money to settle debts, improve the house, or purchase goods that Medicaid would not see as assets. This can be useful in ensuring that the value of the individual’s assets is low enough for them to qualify for Medicaid.

Long-Term Care Insurance

Long-term care insurance is also a good thing to consider. Under this type of insurance, a person can receive assistance with the costs associated with a nursing home or any other services that require long-term care. By doing so, it can give some security to your assets as you will not be required to incur a lot of money on care.

Exempt Assets

While applying for Medicaid, not all the assets owned are taken into account. Some things are not included by Medicaid in assessing eligibility. Such assets are thus referred to as exempt assets. Some examples of exempt assets include:

• Your primary home: Typically, if you foresee going back home after staying in the nursing home or have a spouse or child under 21 living there or an adult child who is disabled, that home will be disregarded.
• Personal belongings: Personal attire, furniture, and such items are not part of the count.
• One vehicle: One pick-up or motorcycle may be retained by the individual.
• Prepaid funeral plans: It is usually overlooked if the individual has placed aside some funds for the funeral and burial services in trust.
• Certain life insurance policies: Policies with a face value of 1,500 dollars may be exempt.

These exempt assets mean that even when one applies for Medicaid, there are some properties that he or she will be able to retain.

What Happens When You Die?

Upon death, Medicaid can seek to recover funds that have previously been spent on your care. This is referred to as Medicaid Estate Recovery. They may stake a claim to assets that are remaining such as your home. In some situations, some protections may prevent Medicaid from taking your home even if you have a surviving spouse or dependent children.

Common Misconceptions

The general impression is that all is lost if one is placed in a nursing home. This isn’t correct. Provided that planning is done, there are options to shield some of your assets. A preemptive behavior that many people understand would ensure that Medicaid doesn’t take away their property or anything valuable. This behavior is gifting their properties to family members so that they do not require help from Medicaid. However, Medicaid has a five-year period in which it considers gifting of properties before applying for Medicaid. If it’s established that properties were truly given out, a penalty period may be invoked during which a person seeking Medicaid will not access it.

If you are worried about asset protection, consult a lawyer or financial adviser. They will forecast the entire scope of rules and norms and suggest a strategy suitable for your circumstances.

FAQs

Will Nursing Homes empty my wallet?

No, a nursing home does not take your assets. But Medicaid will take a look at your assets for eligibility purposes. If your assets exceed the limits, then you may have to spend down some of those in order to be eligible for that particular program.

Is it possible to prevent Medicaid from recovering the home for recovery purposes?

Yes, there are options to prevent your home from the Medicaid estate recovery by commissioning the home to your spouse, or a dependent disabled child or you may create a Medicaid Asset Protection Trust. Seek advice from an elder law attorney to assist you in understanding your choices.

What is the Medicare asset limitation penalty period simply put?

A Medicaid asset penalty period is the period or length for which you are not allowed or qualified for Medicaid services because you transferred your assets within the five-year timeframe before making an application. The period spans the length of the anti-poaching measure and is estimated against the switched-on balance’s worth.

What should I do if I want to apply for Medicaid to help pay for a nursing home?

Medicaid can be available to you but your countable assets must not exceed a certain threshold (generally $2,000 for an individual). There are three options, if you don’t wish to lose Medicaid, all of them level with the law set forth: spend down assets buy-out exempt assets, or set up legal arrangements such as trusts. In this situation, an elder law attorney can help you.

Final Words

Nursing home care planning is important. Often, members of the family do not consider it early enough. If you are thinking about how to protect your assets, now is the right time. Consult with an elder law attorney for good strategies appropriate to your circumstances. As always, there will be variations between state statutes, so you must have all of your professional hats on at the outset. By knowing the rules and how to plan, all of the assets that you have built can be protected, and you can go to the nursing homes without worrying.