And, how does it help you?

Many people, seniors, financial advisors, accountants and attorneys are confused about how the average middle class elder may have Medicaid pay for nursing home long term care while they don’t spend a dime of their life savings. What many don’t understand is that seniors have a right to get something out of all those taxes they paid these many years. The best way to explain it is by a hypothetical story about this all too common problem of nursing home impoverishment.

Levi, Carol’s husband of 52 years, fell and broke his hip. He went into a nursing home for rehab but was not doing well due to his overall poor health. His Medicare rehab coverage was ending. Carol hoped to bring him back home, but he just wasn’t ready. None of their three children could take him in either. She was approached by the social worker who told her she needed to talk to Tony, the lady in the business office, about how she intended to pay for her husband’s care. Tony informed her their charges were over $8,000.00 per month plus “incidentals.” She asked if Carol was going to apply for Medicaid. Otherwise she would need a check by Friday for $13,000. That would cover Levi till the end of the month and the month following.

Mary was confused and scared. Their life-savings would be gone! Betty, her friend from the old neighborhood, told her to see this one elder law attorney. “Don’t go to anybody else. They’ll tell you, you have to pay for months if not years!” Carol was elated and confused because she heard that Medicaid is a social program to pay for people with insufficient assets or income to pay for nursing home care. She and Levi had savings, she could pay for a while, but what about her needs? Tony at the nursing home warned her that she better have not given anything away in the past five years or Medicaid would not pay! She called the attorney Betty recommended.

Before the appointment Carol received a packet from the attorney’s office. The appointment letter was reassuring and advised her that the attorney needed complete information to give her the best advice. When she filled out the financial form, she was shocked, and depressed, about how much they were worth. Their house was worth $250,000. They had $350,000 in savings. They had a condo in Florida worth $175,000. And finally their almost new Lincoln sport utility vehicle was worth $40,000. Of course, not everything was paid for but they were worth over $800,000! It depressed her to think they would lose everything they worked all their lives to save.

Carol arrived at the appointment early. The attorney’s assistant was reassuring as she reviewed the information Carol brought. She asked about the mortgage on their home and the one on the Florida condo. Carol explained that they used some savings and took out a home equity loan to cover the down payment on the condo. Carol could not hold it back, “I will lose our condo and have to pay for years won’t I?” The assistant smiled reassuringly, “Don’t worry about it. You’re here now. It will be alright.”

Bill, the attorney, came in and put Carol at ease. After they talked a while he said, “You don’t have to give Tony that check for $13,000, unless you want to.” She was shocked. “What? Why? How?” He responded  “You can have Medicaid coverage next month if you wish. There were a number of strategies that could effect immediate Medicaid eligibility.”

Carol could not believe it. “I will not have to pay out our savings for years? Don’t I have to be poor?”

“Carol, you could have a home worth $560,000, have it nicely furnished, have a new luxury car, have put $200,000 into a retirement annuity that pays you monthly, have prepaid funerals, a family cemetery plot and $122,900 in the bank and you would be eligible for Medicaid. I don’t know if you would call that poor. If you choose to hire us, you will have choices of how long you want to pay. Different strategies produce different results.”

“Will I lose our beautiful Florida condo?” Bill said, “You have a mortgage on it. That’s good, because that makes it easier to save.” He explained that Medicaid allows a, very, certain amount of “countable assets.” Since the Florida condo was only half paid for it could be part of her allowed countable assets, called the “Community Spouse Resource Allowance.” Anything over that has to be “spent down.”

“Spend down” does not mean the money goes to the nursing home. She could use their money to pay off any bill she wanted. She might pay off the Lincoln, pay off the mortgage, and pre-pay funerals if she wished. In a case like Carol and Levi’s spend down should be part of a comprehensive Medicaid strategy.

Bill explained that strategies might use certain types of trusts, notes, or certain types of annuities to rearrange their assets so that they could be eligible the next month.

“Will I have to give anything away?” she asked. “No, that is completely unnecessary” he assured her.

Carol hired Bill’s firm and gave Tony a check to the end of the month. Carol told her that Medicaid would cover the bills thereafter. Tony knew it since the attorney’s office let her know they had been hired. Levi returned home months later and Carol had the money to pay for the help that Medicare and Medicaid did not cover in home.


The story is hypothetical, but based on real facts. There are strategies that could produce the result. All of them rest on the position that the home and car are exempt assets and any bills or loans can be paid off. The condo and the $350,000 savings are assets that would have to be configured to conform to Medicaid eligibility.

It can be done. Not many attorneys know how. Many would advise Carol to make gifts to divest herself of assets. The problem is that if she did so, Medicaid would not pay for many, many months. All of that is completely unnecessary. If an attorney tells you “You must make gifts to divest assets,” don’t do it. Get a second opinion.

The moral of the story is see a qualified, experienced, certified elder law attorney.

All the best,