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Has anyone used "Gift and Loan" strategy relative to some of the asset protection before a full spend down? How effective is this method and are there any pit falls one should consider?

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Medicaid will insist the loan is at prevailing interest rates. They do not allow gifts. The pitfall is that the loan is subject to collection by MERP.
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If the gifting occurs at least 5 years before the need to apply for Medicaid, that is fine. Otherwise there is a penalty that will delay qualification.
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Yes, and I have a good understanding of the process.The look back period is now five years. If you transfer your parent's house into your name you will need to convince the IRS that you spent at least 24 (aggregate) months of the last 60 months in that home in order to avoid a capital gain.
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I know this may not sit well with some, but why not just spend down ? What purpose is working and saving money all you life if you refuse to use to care for yourself ?
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Caringlove, trying to gift away money will get you in a lot of hot water when it comes to medicaid. If it is within the five year look back period you will face penalities, and a delay in services that can be quite lengthly. Loans must have a payment plan and interest at current rates attached and are also risky. The money a person has is suppose to be used for their care. What you are trying to do is have taxpayers foot the bill for someone so you can benefit from their money. Programs are in place for those in true need.
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Are you trying to find another source of payment for her residence? Or are you just trying to see if you can rely on Medicaid in the future ? Is she eligible for VA? You should talk with a Elder Law certified attorney to see what can be done to shelter assets. Does she have assets that generate income? Also look for the IRS Chronically Ill 7702 to see if she qualifies( I am assuming it is still available this year)
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I do not blame people for sheltering funds. Many caregivers have and will continue to use their own assets for care. Traveling, running errands buying groceries or items. Many people, me included, compromise their own earnings and retirement to caregive. That said, im sure my mother will run through all her assets in AL before she gets to the point of applying.
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I resent the people who just say, spend down. I am a caregiver for my husband who has Parkinsons/Dementia. We are in our mid-sixties. I really don't look forward to living poorly because my husband has to go in a nursing home. I will do everything I can to hang on to the money we have. We worked for it and paid into the system all our lives.
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Not true ramiller. Those who worked all their life, saving a few dollars, are just trying to protect it. No help is available for me and my wife, unless I spend down. If, like many people, I never worked, I would have no problem with govt assistance.
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Why not do a reverse mortgage with your child as the loaning agent?
They send you an agreed amount each month and they foreclose after you die or move to a nursing home. A good attorney can write this up for you.
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I think the problem is that Medicade is for the truly poor & you want Medicate benefits without being truly poor (ie keep your assets). You do not have a "right" to tax payer funded nursing home care. You don't expect tax payers to pay for your house? Nursing home care is the same. While I agree that it stinks that nursing home care is so expensive - there are long term care policies etc that cover/mitigate some of the expense.

I'm coming from an angle where my dad/step mom didn't purchase long term care insurance (too expensive) yet they spent money on annual trips to Alaska and casinos and new cars. Now they are outraged that they have to either spend their own money for dad's nursing home care (not in yet, but really should be) or spending down so they are poor and then can be covered by Medicade.

For those who worked hard all of their lives, saved dollars - now angry about having to spend for your care..... if you don't why should taxpayer?

I know i'll get flamed but as a taxpayer - I'm not very sympathetic - you want the care, pay for it. If you can't, thank goodness you live in a country with a safety net.
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Kimber, I for one agree with you. I'm sick and tired of reading of people who want to shelter their assets and suck off the government. There are others who still have scruples and are scrapping their way through older age, trying as best they can, because the standards they learned while growing up are that you plan to provide for yourself, or learn to make compromises, but you don't shelter assets and suck off the government.

And there are others who've suffered through all or most of their life with debilitating medical conditions, and who are legitimately entitled to government assistance.

I have no compunction having had deductions taken from my paycheck during my working life to help those people truly in need, but I resent like hell that any funds go to people who just want to hoard their money and not spend it on their own care yet expect Medicaid to step in and take care of them.

Thank you for sharing what probably is a controversial and unpopular opinion.
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contact a good ELDER ATTORNEY and they will guide you in how to protect some of your assets........which certain ways of doing it are allowed by Medicaid.
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When it comes to Medicaid and asset protection all of the comments thus far are the most common flow of conversation. This dilemma can be seen from both sides.
Myself, with a husband of 58 years with Alzheimer's,I decided to divorce him to protect our home which is mainly all we have. It was suggested by an Assisted Living planning coordinator that I sell the home and pay for two years of his care (at $3,800 per month) then they would help get him on Medicaid.
Problem with that is our home is worth about $200,000 which would leave me with about $80,000 to get me a place to live. Our only income is social security.

It would only help out the taxpayers for two years or I would end up on Mediciad myself after finding a condo or something to live in.

I think there's a difference when a person has a lot of assets who try to outsmart Medicaid and people like myself who are barely getting by anyway.

So I got the divorce, gave everything to myself and my hubby agreed as much as he could. The divorce is final, my house is safe, car, furniture. My hubby had a CD worth $10,000 and that will be his spend down.

This can backfire if anything happens to me of course. That's the other chance that is taken with the divorce choice.

Good luck to you, it's all hard decisions!
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Caril i am sorry you had to make that had and painful decision. The system is broken in many ways, like my nephew who is severly striken with arthritis and has been fighting for disability for 2 years. He has a wife and two young children. Worker had the response that he could divorce his wife of 14 years and then her and the kids could get more help.....amazing a country that touts family values and yet favors those who are unwed or divorced, just not right. However unlike your situation many people like the OP try and game the system most time so there is money they can inherit as if that is their right. That is what makes people so angry, why should we the taxpayers foot the bill so someone can get a nice fat check when mamma dies. When I first read the post it made me angry, like someone asking for help to "get away with something". A lawyer once told my sister and I some people buy a nice shinny mercadies for daddy, since hes allowed to own a car. The spend 100,000 on a car he will never drive but they will inherit when he dies. The lawyer said medicaid is now looking into things like this too to make sure they arent pulling a fast one. I am sorry about you and your husband and i understand why u did what you had to do, others though I do not understand.
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Bobbi, I know people whose spouses re in NH and it hasn't left the other spouse poor. The law doesn't allow it anymore. Medicaid will pay for the ill spouse. Not sure how they work with SS and pension.
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The interesting thing about this question...even though there have been many answers...is I am not really certain what the OP wanted to do. Rely on medicaid in her home? Use Medicaid for a NH? Spend down? Question brought many comments but still........wonder what they really want to do.....
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Good question Anne, I was wondering the same thing. Maybe the OP will give a little more explanation.
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Not having the details of the OP's situation, there sure is a lot of judging and criticizing and making negative assumptions. It seems people are ready and waiting to pounce, looking for someone to dump their misplaced anger on.
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My understanding re: how Medicaid works when there is a "community spouse" is that the spouse who is NOT going into a NH is allowed to shelter about $100,000 in assets. The house, if the spouse is living in it, is a protected asset until the community spouse vacates, dies, etc.

I would not take financial advise from someone whose job it is to get the facility paid any way it can. I would suggest that anyone who is facing loss of assets due to a spouse needing nursing home care engage an eldercare attorney whose job it is to work for YOU and protect your assets.
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Babalou it is similar here in North Carolina. I was told my wife would be able to have a maximum of $3,000.00 of cash and would surrender her Social Security check each month to help pay for her care. In my name, I would be allowed to have $120,000.00 in cash and investments, our home, a newer car and a second car but it had to be older. All would be left alone until after we both have passed and then the state has the option to come after to estate for what they paid out on her as well as anything they may have paid out on me. My daughter asked about a "medicaid divorce" (I did not like that idea) however it was his opinion that the state could most likely challenge that and nullify it unless it was done before the end of the look back period. Their were some scenarios he indicated I could look into but most would limit my access to any money shelter and even then may be subject to the state seeking recovery of expenses. At this time I am paying 100% out of pocket.

It is my understanding that the North Carolina Department of Health pays out +/- 75% of it's budget for medicaid costs alone so I would guess the rules here are subject to change again at any moment.

As you said, I would not take advice from anyone except a good eldercare attorney.
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JDP1000, my Medicaid experience was quite different than yours, particularly in the spenddown requirements, which did in fact put me in a very precarious financial situation as I deal with retirement. I am SO glad the rules have changed! (My application for my husband was about a dozen years ago.)

This again points out the critical importance of consulting an Elder Law specialist and not listening to tales of what other people heard or even what they experienced years ago.
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As our eldercare lawyer said," you saved all your life to enjoy retirement and now you are screwed." Can't get LTC insurance once someone is diagnosed with dementia. Your savings and investments will go for care and you'll have to sell your house to have money to live on. I'll e left with only $150,000 to live the rest of my life on. Worked 50-70 hr weeks so I'd have some money to travel on. My husband chose to not save and now my savings has to be used to pay for his care. Maybe I should have taken the lawyers advise, and got a divorce when we first talked to him.
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