"Bread and Butter" Planning Techniques for Medicaid Eligibility

“Bread and Butter” Planning Techniques for Medicaid Eligibility

Many potential Medicaid eligibility cases do not require sophisticated planning techniques. Relevant administrative regulations are referenced.

I. Hypothetical

Husband is about to permanently enter nursing home. The husband and wife have the following assets:

Residence $($30,000 mortgage) $200,000 (net of mortgage)
Bank accounts (jointly held) 100,000
Life insurance on husband
($100,000 face, $5,000 cash value) 5,000
Investments (jointly held) 25,000

Debts and anticipated debts are $10,000, which includes attorney’s fees, accountant’s fees and needed repairs on the home.

The planning goals are Medicaid eligibility, maximum preservation of assets and avoidance of loss of Medicaid eligibility.

II. Recommendations

A. Transfer all bank accounts and investments into the name of the wife for management purposes.

B. Residence should be transferred into wife’s sole name. Home should not be sold by wife until after husband is eligible for Medicaid (spouse’s cash not counted toward husband’s assets after husband’s eligibility).

C. Life insurance policy should be cashed in after institutionalization (see N.J.A.C. 10:71-4.4(b)4.).

D. After husband enters the nursing home, pay off mortgage ($30,000), debts and expenses ($10,000), cash in life insurance.

Note: The Community Spouse Resource Allowance is $65,000 (one-half total of bank accounts, investments and cash value of insurance). The amount which is not protected need not be used on nursing home costs, and payment accelerates the date of Medicaid eligibility.

E. Balance of funds used to pay nursing home costs and wife’s expenses in the community. Other possibilities are prepayment of taxes, prepaid funeral funds and general debts.

Suggestion: For alternative arrangements, see Additional Post-Eligibility Considerations, Post No. 2.



Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© March 2009, Post #12