It’s Never Too Late To Do Medicaid Planning

People sometimes think that it’s too late to do Medicaid asset protection planning, especially if a loved one is already in a nursing home.  But that’s not true!  It’s NEVER too late to do Medicaid planning, even if your loved one is already in a nursing home.  There are emergency Medicaid planning strategies that can be used that can protect half of the assets of the nursing home patient, and possibly more. 

In New York, one of the best emergency planning strategies is a gift and loan strategy.  It requires precise calculations, but here’s a sketch of how it generally works:

Gift/Loan Strategy:

• Medicaid Applicant (or person acting under a power of attorney) gifts approximately 50% of assets
• Medicaid Applicant loans the remaining 50% to a responsible person
• The Medicaid Applicant then qualifies for Medicaid as the loan does not count as an asset, but rather as an income stream to MA (see our post on how most income overages won’t disqualify you for Medicaid)
• The Medicaid Applicant then applies for Medicaid and is issued a penalty period
• The penalty period begins to run on 50% gifted
• Loan income covers cost of care during penalty period

There are a couple of risks with respect to the gift and loan strategy.  You need to make sure you work with legal counsel to properly calculate the exact amount that should be gifted and loaned.  You also need to make sure to loan the money to a trustworthy relative or friend.

There are a few other emergency Medicaid planning strategies.  They include personal care contracts and funding exempt assets, especially prepaying for burial expenses and/or plots. 

When a loved one is in a nursing home, it’s not too late to qualify for Medicaid.  To discuss emergency Medicaid planning strategies, contact attorney Moira Laidlaw at (914) 767-0646 or email Moira at mlaidlaw@laidlawfirm.com.