Methods of preserving assets while insuring Medicaid eligibility

We have covered the difference between exempt and nonexempt assets in the past when it comes to applying for Medicaid. However, the question remains, how do you transform an nonexempt asset into an exempt asset?

Brief overview of the importance of exempt and nonexempt assets

As we previously pointed out, exempt assets are not counted when the state Medicaid agency determines your eligibility for Medicaid. Thus, the more nonexempt assets you are successful in transforming into exempt assets, the more of your assets you are able to keep while still qualifying for Medicaid. These strategies are called asset preservation strategies. There are many different strategies legal practitioners like myself will advise you to utilize in order to preserve assets. There are too many to mention here in one post. Additionally, the method and timing of these asset transfers must be followed in order to avoid the imposition of a Medicaid transfer penalty.

However, the below hypothetical scenarios provide an example of how these asset protection strategies can save you thousands of dollars while still insuring you qualify for Medicaid.

Examples of transforming nonexempt into exempt assets

  1. Selling $30,000 of stock and spending that money to put a roof on your house assuming the value of the house under $500,000.
  2. Taking #5,000 out of your savings account and making handicap modifications to your house such as handrails, ramps, or installing a wheelchair accessible shower.
  3. Selling a second vehicle, and using that money to modify an existing vehicle (if possible) to make that vehicle accessible for the disabled Medicaid applicant.
  4. Selling $30,000 in stock and purchasing a Medicaid exempt annuity offering periotic payouts. Keep in mind, not all annuities are exempt from the Medicaid asset limit imposed by law.
  5. Selling $30,000 in stock and purchasing specific types of rental assets to bring in income. Keep in mind, there is a Medicaid income limit that is imposed by law.

Conclusion

The process of protecting assets by transforming nonexempt assets into exempt assets is highly complicated. The method and timing of these transfers must be done correctly to insure the avoidance of a Medicaid transfer penalty, and to insure Medicaid eligibility. If you or someone you love is disabled and in need of in-home nursing care or might need to reside in a nursing home or long-term living facility, contact me immediately. You can call my office phone, cell phone, or reach out by email. Remember, you are not alone.

Leave a Reply

Your email address will not be published. Required fields are marked *