April, 2004
Medicaid 103
You will recall that Susan has made the difficult decision to put John in a nursing home. The first thing she wants to know is how much is this going to cost them? Last month we looked at how income is impacted. Now we look at how their assets will be affected. What can they keep and what do they have to liquidate?
To qualify for Medicaid, you can't have more than $2,000 in Countable assets. What assets are Countable? It's easier to figure out what are Noncountable. For 98% of the population, you are looking at very little: your house, your car and any prepaid funeral arrangements. (And don't forget, just because they don't count your house when qualifying you, doesn't mean they won't still place a lien on it.) You are also allowed to keep any assets that are essential to your support, such as annuities or rental property.
As I said, you can't have more than $2,000 in Countable assets. Unless you are married. Then you get your $2,000, and your spouse gets to keep half of whatever is left, with a minimum of $20,000 and a maximum of $90,000. How does this work with Sue and John? Let's give them the following pretend assets:
a.
House worth $450,000 ($250,000 mortgage)
House worth $450,000 ($250,000 mortgage)b.Time-share worth $10,000
Time-share worth $10,000c.Cash, stocks and bonds worth $190,000
Cash, stocks and bonds worth $190,000d.1997 Honda Civic worth $2,000
1997 Honda Civic worth $2,000e.2000 Toyota Camry worth $4,000.
2000 Toyota Camry worth $4,000.If they do nothing, they will have $202,000 in Countable assets. They will give $2,000 to John and let Susan keep half of the remaining $200,000, up to a maximum of $90,000. They just lost $110,000 to the nursing home.
This could have been avoided. Sell the two cars and take the $6,000, along with another $30,000 and buy Sue a decent car with an extended warranty. Spend another $20,000 to prepay their funerals, and $10,000 to buy some new furniture for the house. We just converted $60,000 of Countable assets to Noncountable ones. Another way to do this is to pay down the mortgage. Don't forget though, that Sue gets to keep the first $20,000 regardless, so you don't need to sell everything.
Tedious and confusing, I know. Next month we'll talk about hiding assets. That's more fun.
