At this time, the average cost of a nursing home in Kentucky is between $70,000-$80,000 a year. The national average for a private room is over $100,000 a year. Typically, the people who require these types of facilities are retired, live on a fixed income, and are not in a position financially to cover the significant costs associated with long-term care. The unfortunate reality is that many families exhaust the entirety of their savings within two years of entering a nursing home.
Medicaid may appear to be the solution and problem for anyone in this position. It provides the financial assistance you need to pay for the long-term care facility, but you may have too many assets to qualify. From the onset, these same people begin to view the assets that they spent a lifetime accumulating are what is preventing them from getting the assistance they need. Because of the stress and urgency of the situation, they may make very costly mistakes.
This includes selling their home for less than market value to a friend or relative or simply giving away their assets. In extreme cases, some people may give away everything they own and realize it wasn’t what they needed to do to qualify. When you work with a qualified attorney who understands Medicaid planning, you will discover that you can be eligible and retain your assets.
Exemptions, Spend Downs, & Transfers
Before you apply for Medicaid, your attorney will ensure that your assets are either exempt, have been spent, or have been transferred appropriately. For example, Medicaid cannot take your family home if your spouse lives in it. Even if you pass away in the nursing home, your spouse can continue to live in it. The same extends to a car and an IRA. These are examples of exempt assets.
Although Medicaid allows you to “spend down” the money, it must be spent on either the person entering the nursing home or their spouse. Medicaid has a five-year lookback period and can actually penalize you for improperly giving away assets and money during it. An elder law attorney can advise you on how to “spend down” your money correctly and legally.
If you begin your Medicaid planning early, you and your attorney can discuss the possibility of placing your assets in an irrevocable trust. The downside of these trusts is that once your assets go into the trust, you will be unable to take them out. (Do not confuse these with irrevocable income-only trusts.) The tremendous advantage of an irrevocable trust is that once you fund the trust with a specific asset, that asset is no longer counted as yours.
Contact the Kentucky Estate Planning Law Center
Medicaid laws are constantly changing and are complex. The attorneys at the Kentucky Estate Planning Law Center study and follow them, so we will be in the best position to advise how to retain your assets legally and still qualify for Medicaid. Contact us today to schedule your consultation.