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While most caregiving in a family starts out as a labor of love, but it can be an expensive obligation. Some long-term care insurance policies allow you to pay family members from the proceeds of your policy. If that is not an option and your parent has the ability to pay you, it's imperative that you have a Caregiver Agreement drawn up to avoid a gifting penalty if your parent has to eventually apply for Medicaid (financial assistance for long-term care). Some states have programs to help people pay for the caregiver of their choice and in certain circumstances that can be a family member. Most of these programs have income and other eligibility requirements. For information on what's available in your state, contact your local Medicaid program. For information on Caregiver Agreements, click here.
IRAs can count as an available asset and affect Medicaid eligibility. Whether your IRA counts as an exempt asset depends on whether it is in "payout status" or not. At age 70 1/2 individuals must begin taking required minimum distributions from their IRAs, which means the IRA is in payout status. It may not count as an available asset for the purposes of Medicaid eligibility, but payments you receive will count as income. If the IRA is not in payout status, the IRA is a non-exempt asset, which means the total amount in the IRA will probably be counted as an asset, affecting your Medicaid eligibility. In order to qualify for Medicaid, you need to cash out your assets and spend-down the asset. Alternatively, you could transfer the money to your spouse or someone else, although there will likely be an income tax penalty for doing this. Read more.
Our experts answer some of the most common questions centered around paying for care. The answers are not intended to be legal advise. Every situation has many variables and we encourage you to contact us for a referral to an expert in the area of concern.
This will depend on the state in which she lives. Generally, if there is a spouse living at home, the house would be an exempt asset. If your mother is a single person, a few states have a rule that the home loses its status as an exempt asset for Medicaid purposes if the owner is living in a nursing home and it's medically certified that she won't be able to return to her home. In this case, she would need to sale the house and spend-down her assets for her care before she becomes Medicaid eligible. If you get help from Medicaid to pay for the nursing home, the state must attempt to recoup from your estate the benefits it paid for your care. This is called "estate recovery". and this occurs upon death of the Medicaid recipient. It's imperative you talk to an expert before making transfers or applying for assistance. Learn more, click here or contact us.