How to Qualify for Medicaid and Protect Your Assets

In today's world many people can spend their entire life savings on home health care and nursing home costs. However, with proper planning this does not need to be the case.

In fact, it is possible to receive assistance from the Government for health care costs associated with long term care. Medicaid qualification could be the answer but knowledge of the rules is key.

How To Qualify For Medicaid

Income and Assets are primarily the two categories Medicaid considers for qualification.

Marital status is the other consideration. The maximum amount of income and assets you may have and still qualify is dramatically different based on whether you are married or single.

However, there are still some steps a single person can do to help protect some assets and still qualify.

Qualifying For Medicaid If You Are Married

Income Considerations:

Under most circumstances a married Medicaid Applicant (the sick spouse) can allocate some or all of his or her income to the well spouse remaining at home. Medicaid's term for this is the Minimum Monthly Maintenance Needs Allowance or MMMNA for short.

When the Medicaid application is made by the sick spouse, the rules separate the income of each spouse and review the incomes independent of each other.

This is vital information as if the sick spouse's income is too high (approximately $2000 per month in most states) then he or she will not be qualified to receive Medicaid.

For example, let's assume Harry is the sick spouse and his income is $2500/month while Sally is the well spouse and her income is $1200/month.

Harry's application for Medicaid would be denied because his monthly income exceeds the maximum limit of $2000 per month. The sad fact is most families do not know the Medicaid Rules. They do not understand how to qualify and therefore end up spending down the majority of their monthly income as well as potentially all their retirement savings on nursing home costs!

Knowledge of the rules and the strategies to apply are key because not only could you qualify in the example above but a significant portion of income can be shifted to the well spouse so that their lifestyle can be maintained.

Asset Considerations:

Regardless of whose name is on the asset the Medicaid rules look at both spouses' assets as one. In effect, all the assets go into one bucket.

Medicaid places the assets in the three following categories:

• Exempt Assets: $2000 in cash, the primary home, one car, personal property, funeral/burial contracts, IRA's (in most states protected if in well spouse's name)and up to $1500 in cash value life insurance


• Unavailable Assets: an interest in someone's estate or real estate that cannot be sold


• Countable Assets: cash, CD's, stocks, bonds, mutual funds, IRA's, 401(k), 403(b), tax-deferred annuities, 2nd car, buildings or land owned

The well spouse is then permitted to reach into the bucket of assets and begin pulling out assets for their use.

From list above the well spouse is allowed to begin pulling assets out of the bucket such as the primary home and one car. Medicaid rules only allow the well spouse to pull out a limited amount of assets in addition to the house and car. In most states that limit is approximately $109,000.

Obviously it would be easy for most middle income families to easily reach the $109,000 upper limit. When the well spouse has more than $109,000 in total assets a major problem ensues. The well spouse would be forced to spend down all remaining assets greater than $109,000 unless they were aware of the rules and were able to apply proper asset protection strategies.

Most families can protect up to 100% of their assets if no one is in the nursing home and between 50% - 60% of the assets even if one or both spouses are already in a nursing home!